A neoteric approach to geometric shipment policy in an integrated supply chain with setup cost reduction and freight cost using service level constraint

Abstract

This paper explores a neoteric approach to geometric shipment policy and concerns the impact of controllable lead time, setup cost reduction, lost sales caused by stock-out and freight cost within an integrated vendor-buyer supply chain configuration using service-level constraint. In particular, the transportation cost is a function of shipping weight, distance and transportation modes. In other words, truckload (TL) and less-than-truckload (LTL) shipments. A heuristic model is developed to minimize the joint expected total cost (JETC), when the mode of transportation is limited to TL and LTL shipments. Numerical examples including the sensitivity analysis with some managerial insights of system parameters is implemented to endorse the outcome of the supply chain models.