Aggregation with Capacity Constraint: An

example

G Corp. sources from hundreds of suppliers and is considering the

aggregation of inbound shipm$$nts to lower costs.

Truckload shipping costs $$500$ per truck along with $$100$ per pickup.

Average annual demand from each supplier is $10,000$ units.

Each unit costs $$50$ and G Corp. incurs a holding cost of $20$ percent.

What is the optimal order frequency and order size if G Corp. decides

to aggregate four suppliers per truck?

What is the optimal order size and frequency if each truck has a

capacity of $2,500$ units?