An iterative procedure for solving the uncapacitated production-distribution problem under concave cost function

Under production economies of scale, the trade-off between production and transportation costs will create a tendency towards a decentralized decision-making process. First, reviews previous approaches suggested in the literature for solving the production-distribution problem. Then offers a non-linear programming model of the transportation problem under production economies of scale to illustrate the computational complexity of the problem. Discusses and proves the convergence of the ‘tangent line approximation procedure’. Finally, introduces and solves a numerical example.