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Sustainability 2017, 9(9), 1675; doi:10.3390/su9091675

Shipment Consolidation Policy under Uncertainty of Customer Order for Sustainable Supply Chain Management

1
Graduate School of Information Security, Korea University, Seongbuk-gu, Seoul 02841, Korea
2
Graduate School of Management of Technology, Korea University, Seongbuk-gu, Seoul 02841, Korea
3
Graduate School of Industrial Management Engineering, Korea University, Seongbuk-gu, Seoul 02841, Korea
4
Division of Industrial Management Engineering, Korea University, Seongbuk-gu, Seoul 02841, Korea
*
Author to whom correspondence should be addressed.
Received: 26 August 2017 / Revised: 13 September 2017 / Accepted: 18 September 2017 / Published: 20 September 2017
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Abstract

With increasing concern over the environment, shipment consolidation has become one of a main initiative to reduce CO2 emissions and transportation cost among the logistics service providers. Increased delivery time caused by shipment consolidation may lead to customer’s order cancellation. Thus, order cancellation should be considered as a factor in order uncertainty to determine the optimal shipment consolidation policy. We develop mathematical models for quantity-based and time-based policies and obtain optimality properties for the models. Efficient algorithms using optimal properties are provided to compute the optimal parameters for ordering and shipment decisions. To compare the performances of the quantity-based policy with the time-based policy, extensive numerical experiments are conducted, and the total cost is compared. View Full-Text
Keywords: inventory control; shipment consolidation; quantity-based policy; order cancellation inventory control; shipment consolidation; quantity-based policy; order cancellation
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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MDPI and ACS Style

Kang, K.; Hong, K.-S.; Kim, K.H.; Lee, C. Shipment Consolidation Policy under Uncertainty of Customer Order for Sustainable Supply Chain Management. Sustainability 2017, 9, 1675.

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