Optimizing inventory levels in a serial supply chain considering multiple suppliers and transportation costs

Given the importance of incorporating transportation costs in inventory replenishment and supplier selection decisions, this research work addresses the issue of order quantity allocation and supplier selection in a multi-stage serial supply chain system with multiple suppliers, considering inventory replenishment, holding and transportation costs simultaneously. We propose a mixed integer non-linear programming model to determine the optimal inventory policy for all the stages in the supply chain and allocation of orders among the suppliers in stage 0. Sensitivity analysis is carried out to determine the effect of changes in cost parameters of the stages on supplier order allocation.