On Extending Russell and Krajewski's Algorithm for Economic Purchase Order Quantities*

Abstract

ABSTRACTRussell and Krajewski presented an optimal purchase order quantity algorithm that considered the effect of the transportation rate structure for less‐than‐truckload (LTL) shipments. The authors applied the Russell and Krajewski algorithm to a variety of freight classes and lengths‐of‐haul. Anomalous cases were found in which the freight rate schedule, when used with the suggested algorithm, resulted in incorrect order size decisions. In this comment, the authors consider the impact of these anomalies on the optimal order quantity and associated total costs. A procedure is presented to adjust the Russell and Krajewski algorithm to arrive at the optimal purchase order quantity and the lowest total annual cost.