MULTI-ITEM TWO-STAGE EOQ MODEL INCORPORATING QUANTITY AND FREIGHT DISCOUNTS

Supply chain management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high-performing business models. Managing supply chain is a difficult task because of complex interrelations and integration of various entities that exist in it. One of the entities is transportation of items from source to destination. This process becomes tedious, when items are moving with one or more stoppage as on stoppage point inventory carrying cost would also be incurred. A single source, single destination and multi-item EOQ model has been discussed in the literature for single stage as well as two or more stages. Different discount policies are offered to procure and transport goods from one stage to the other. In the present study a mathematical model is developed to minimize the sum of inventory, procurement and transportation costs when several items are shipped from a single source to single destination through an intermediate stoppage, in which it is assumed that inventory carrying charge at the intermediate stoppage, is very high after a pre-specified time. A method of solution is proposed and verified numerically.