Sourcing and transportation strategies in a supply chain: A nonlinear programming model

Supplier selection and inbound transport are among the main levers of the supply chain design and performance evaluation. Supplier selection decision is largely studied in the literature but little attention is given to the transportation aspect in this decision. In this paper, a non-linear programming model is proposed to simultaneously determine the optimal number of suppliers to select and the order quantities to allocate to them, taking into account the transportation policies. The product bought from supplier can be shipped directly or via consolidation terminal to the buyer. Total logistics cost is the objective to minimize in the model, under suppliers, buyer and transportation constraints. A comprehensive example is provided to illustrate the model under some scenarios.