THE EFFECT OF LESS-THAN-TRUCKLOAD RATES ON THE PURCHASE ORDER LOT SIZE DECISION

Abstract

Supply chain management (SCM) is a coordinated approach for managing the flow of goods from suppliers to ultimate consumers. The goal of SCM is to meet customer service objectives while minimizing inventory and related costs. Inherently, SCM should be based on the exchange of substantial quantities of information among the buyer, supplier, and carrier. Buyers, suppliers, and carriers share the information to increase the efficiency and effectiveness of the supply chain. Although the SCM concept has gained wide acceptance, and has been examined extensively in the logistics literature, the role of the carrier, and transportation service, in realizing the benefits of SCM has not received much attention. This research illustrates the effect that pragmatic transportation costs can have on the purchase order lot size decision.