MULTIITEM INVENTORY SYSTEMS WITH JOINT ORDERING AND TRANSPORTATION DECISIONS

In many practical situations joint determination of ordering and trans portation decisions for a family of items may lead to a considerable c ost saving. In this paper we consider a multi-item inventory system wi th a freight rate schedule that is a function of the volume shipped an d the capacity of a standard container. Orders for the family of items are all triggered by a coordinated periodic (R, S) policy. Economies of scale exist because of the reduced freight rates when ordering a fu ll-container load instead of a less-than-container load, A full-contai ner load can be achieved by enlarging the initial order quantities. A heuristic is proposed to decide whether an initial order should be enl arged or not. The heuristic is based on a comparison of the expected s aved shipping cost, the expected saved ordering cost and the expected extra holding cost, caused by an enlargement. Some numerical examples show that the heuristic works quite satisfactorily.