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The supplier selection problem with quantity discounts and truckload shipping

  • Mansini, Renata
  • Savelsbergh, Martin W.P.
  • Tocchella, Barbara
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    To minimize procurement expenditures both purchasing and transportation costs need to be considered. We study a procurement setting in which a company needs to purchase a number of products from a set of suppliers to satisfy customer demand. The suppliers offer total quantity discounts and transportation costs are based on truckload shipping rates. The goal is to select a set of suppliers so as to satisfy product demand at minimal total costs. The resulting optimization problem is strongly NP-hard. We develop integer programming based heuristics to solve the problem. Extensive computational experiments demonstrate the efficacy of the proposed heuristics and provide insight into the impact of instance characteristics on effective procurement strategies.

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    Article provided by Elsevier in its journal Omega.

    Volume (Year): 40 (2012)
    Issue (Month): 4 ()
    Pages: 445-455

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    Handle: RePEc:eee:jomega:v:40:y:2012:i:4:p:445-455
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    6. Burke, Gerard J. & Carrillo, Janice & Vakharia, Asoo J., 2008. "Heuristics for sourcing from multiple suppliers with alternative quantity discounts," European Journal of Operational Research, Elsevier, vol. 186(1), pages 317-329, April.
    7. Xia, Weijun & Wu, Zhiming, 2007. "Supplier selection with multiple criteria in volume discount environments," Omega, Elsevier, vol. 35(5), pages 494-504, October.
    8. E. Angelelli & R. Mansini & M. Vindigni, 2009. "Exploring greedy criteria for the dynamic traveling purchaser problem," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 17(2), pages 141-158, June.
    9. Robert M. Saltzman & Frederick S. Hillier, 1992. "A Heuristic Ceiling Point Algorithm for General Integer Linear Programming," Management Science, INFORMS, vol. 38(2), pages 263-283, February.
    10. Zhang, Ju-liang & Zhang, Ming-yu, 2011. "Supplier selection and purchase problem with fixed cost and constrained order quantities under stochastic demand," International Journal of Production Economics, Elsevier, vol. 129(1), pages 1-7, January.
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