In today’s increasingly cost-conscious and competitive market, companies strive to manufacture and distribute products
in an efficient manner. In this article, we have studied the impact of transportation costs on supplier selection, inventory
replenishment, and distribution decisions in a serial supply chain. We have proposed an MINLP model to determine the optimal
inventory levels for the stages in the supply chain, allocation of orders among the suppliers at the initial stage, and shipments
from the suppliers to the manufacturer and between the stages using truckloads. Since the supplier selection problem
is intrinsically multi-criteria in nature, our model minimizes the cost criterion in the objective while simultaneously considering
quality as a goal constraint, specifying a minimum acceptable perfect rate from the selected suppliers, and capacity
constraints.
An illustrative example of a five-stage serial supply chain with four suppliers has been solved to show the cost savings
obtained when transportation costs are included in the objective function. Moreover, sensitivity analysis was performed
by varying the holding, setup, and transportation costs. The results show that these cost parameters have a considerable
impact on the selection of suppliers and order quantity allocation to suppliers.