Most distribution literature focuses either on strategic issues, such as locating Dcs, or on operational issues as vehicle routing where as our study deals with tactical optimisation. There are a few paper which deal with a kind of cutoff order size concept. Sussams1 considers the choice between direct and indirect transport for a customer. Sussams determines a minimum order size for direct transport, which comparable to our cutoff order size. The transport cost are specified for each order (no consolidation) and the tactical problem, of setting a cutoff order size for a whole group of customer, is not considered. Holier et al2 and Dekker et al3 consider a cutoff order size (also called cutoff transaction size or break quantity) in an inventory context and show that inventory costs can be reduced substantially by using the cutoff order size concept, Holier et al2 consider a single stocking point, while Dekker et al3 consider a one warehouse n-retailer system. Other Studies dealing with the choice between direct and indirect transport are from Daganzo,4 ,Kasturi et al6 and Hall. All there stuies treat the problem in a deterministic setting.