A supply chain network design considering transportation cost discounts

This study addresses an integrated facility location and inventory allocation problem considering transportation cost discounts. Specifically, this article considers two types of transportation discounts simultaneously: quantity discounts for inbound transportation cost and distance discounts for outbound transportation cost. This study uses an approximation procedure to simplify DC distance calculation details, and develops an algorithm to solve the aforementioned supply chain management (SCM) problems using nonlinear optimization techniques. Numerical studies illustrate the solution procedures and the effects of the model parameters on the SCM decisions and total costs. Results of this study serve as a reference for business managers and administrators.

► This study addresses the integrated supply chain network design problem.
► Consider quantity discounts and distance discounts for transportation costs.
► Use an approximation procedure and nonlinear optimization techniques.
► Discuss the effects of the model parameters on the SCM decisions and total costs.
► Results serve as a reference for business managers and administrators.