A general quantity discount and supplier selection mixed integer programming model
ABSTRACT Recently, new models and heuristics for exploiting quantity discounts have been proposed that are applicable in classical
purchasing as well as in an e-business environment and can be implemented as part of an advanced planning system. These models
can now handle both the single- and multi-item case with fixed cost to be shared among several products ordered at the same
point in time from a single supplier. Furthermore, the supplier selection problem is addressed, i.e., how to best exploit
quantity discounts over time offered by several suppliers. Last but not least, additional constraints on the buyer’s or on
the supplier’s side may be included. While so far only purpose-built heuristics have been proposed for this generalized problem,
we present a linear mixed integer programming (MIP) model, which not only represents the all-units discount but also the incremental discount
case. Furthermore, the objective function chosen resolves (former) conflicts among proponents of a purely cost oriented and
a cash flow oriented modeling approach. Computational tests show that our model yields near optimal solutions within a given
CPU time limit by making use of a standard MIP solver.
- Journal of The Operational Research Society - J OPER RES SOC. 01/1993; 44(7):717-723.
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ABSTRACT: In this paper we consider the problem of supplier selection and purchase order sizing for a single item under dynamic demand conditions. Suppliers offer all-units and/or incremental quantity discounts, which may vary over time. Although the problem refers to a typical planning task of a purchasing agent, which is often solved without algorithmic assistance, in an eBusiness (b2b) environment, the need for the integration of an automatic performance of this planning task into a web-based procurement process becomes evident. A new model formulation for this problem is developed, and a simple but easily extendible heuristic procedure is presented and tested. The heuristic is implemented as part of the Advanced Planner and Optimizer (apo) software of SAP AG, Walldorf, Germany.Production and Operations Management 11/2002; 11(4):499 - 515. · 1.32 Impact Factor
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ABSTRACT: In today's competitive environment, it is extremely difficult to successfully produce high quality, low cost products without considering a satisfactory set of suppliers. A useful approach to ensure the reliability of a manufacturer's supply stream is to follow a multiple sourcing policy. Mathematical programming techniques lend themselves nicely by providing optimal solutions to several instances of the problem. However, a recent review of supply selection methods (Weber et al. 1991) identified very few articles that have proposed mathematical programming techniques to analyze supplier selection decisions. Given the economic importance and inherent complexity associated with the supplier selection problem, this article proposes a mixed integer programming approach to solve the supplier selection program. The modelSUPPSEL (Supplier Selection) simultaneously decides the set of suppliers and order quantity allocations among them.Journal of Supply Chain Management 04/2006; 35(2):50 - 58. · 2.65 Impact Factor