Design and evaluation of an integrated inventory and transportation system

Z. N. Chen, Ka Man Lee, W. H. Ip, G. T S Ho

Research output: Journal article publicationJournal articleAcademic researchpeer-review

2 Citations (Scopus)

Abstract

This paper proposes the adoption of an integrated inventory and transportation system (IITS) to minimize the total costs of inventory and transportation. A non-linear programing is developed by analyzing transportation and inventory costs with one supplier and many retailers in the distribution environment. The paper compares the proposed model with the traditional approach in computing total costs with numerical data. The results indicate that the total costs can be optimized by adopting integrated programing rather than the traditional approach, along with achieving improved customer service levels. In particular, sensitivity analysis is applied to determine the performance of the IITS under various transportation costs, holding costs and shortage costs. It shows that the transportation cost per unit is most sensitive in the proposed model. In this situation, the IITS is more effective for cost saving when set-up cost, holding and shortage costs are high, but is less effective for situations involving high per-unit transportation costs.
Original languageEnglish
Pages (from-to)491-507
Number of pages17
JournalTransportation Planning and Technology
Volume35
Issue number4
DOIs
Publication statusPublished - 1 Jun 2012

Keywords

  • customer demands
  • economic order quantity model
  • integrated inventory and transportation system
  • non-linear integrated programing
  • probability distribution

ASJC Scopus subject areas

  • Transportation
  • Geography, Planning and Development

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