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A logistics cost function with explicit transport costs

Harald Minken and Bjørn Gjerde Johansen

Economics of Transportation, 2019, vol. 19, issue C, -

Abstract: With a view to construct a new framework to assess the benefits of freight transport improvements, an Economic Order Quantity model with uncertain lead time demand is equipped with detailed transport costs. The problem is to minimise total logistics cost by choosing shipment size, vehicle size and reorder point subject to constraints on vehicle size and annual transport capacity. An analytical solution in all variables except the reorder point is derived, reducing the cost minimisation problem to a well-behaved problem in one dimension only.

Keywords: Logistics; Transport cost; Non-linear optimization; EOQ; Uncertain lead time demand (search for similar items in EconPapers)
JEL-codes: C61 D61 R41 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1016/j.ecotra.2019.04.001

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