Abstract: We consider a multistage inventory system composed of a single warehouse that receives a single product from a single supplier and replenishes the inventory of n retailers through direct shipments. Ordering costs are dominated by the shipping costs associated with full truckload transportation with cargo capacity constraints. All costs are stationary. Demands for the n retailers over a planning horizon of T periods are given. The objective is to find the shipment quantities over the planning horizon to satisfy all demands at minimum system-wide cost without backlogging. We show that both the shipments between the supplier and warehouse and between the warehouse and each retailer satisfy the so-called OLTL property; that is, between two consecutive inventory regeneration points, there is at most a single less than truckload shipment. Using this property, we develop an exact algorithm that runs in polynomial time for a given number of retailers. Additional structural properties in the single retailer case lead to an algorithm with complexity O(T³). To overcome the computational burden when the number of retailers is large, we propose two additional algorithms based on Lagrangian decomposition. Computational experiments show the effectiveness of the algorithms and the gains associated with coordinated versus decentralized systems.