Abstract: In generalized transportation problem(GTP), the cost of transportation cij per unit product from the ith origin to the jth destination is considered as independent of amount of transported commodity xij. But in real life problems, there are many situations, e.g. quantity discount, price break etc., in which cost of transportation cij depends upon the amount of transported commodity xij. Based on these situations, in this paper, we consider a new type of discounted generalized transportation problem in which the cost of transportation cij per unit product depends on the amount of transported commodity xij. Thereby, we develop a new algorithm for obtaining the optimum solution of this problem. Finally, a numerical example is illustrated to support the algorithm.