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A solution procedure for mixed-integer nonlinear programming formulation of supply chain planning with quantity discounts under demand uncertainty

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  • Sisi Yin
  • Tatsushi Nishi

Abstract

Quantity discount policy is decision-making for trade-off prices between suppliers and manufacturers while production is changeable due to demand fluctuations in a real market. In this paper, quantity discount models which consider selection of contract suppliers, production quantity and inventory simultaneously are addressed. The supply chain planning problem with quantity discounts under demand uncertainty is formulated as a mixed-integer nonlinear programming problem (MINLP) with integral terms. We apply an outer-approximation method to solve MINLP problems. In order to improve the efficiency of the proposed method, the problem is reformulated as a stochastic model replacing the integral terms by using a normalisation technique. We present numerical examples to demonstrate the efficiency of the proposed method.

Suggested Citation

  • Sisi Yin & Tatsushi Nishi, 2014. "A solution procedure for mixed-integer nonlinear programming formulation of supply chain planning with quantity discounts under demand uncertainty," International Journal of Systems Science, Taylor & Francis Journals, vol. 45(11), pages 2354-2365, November.
    • Handle: RePEc:taf:tsysxx:v:45:y:2014:i:11:p:2354-2365
    DOI: 10.1080/00207721.2013.769645
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    References listed on IDEAS

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    Cited by:

    1. Ziang Liu & Tatsushi Nishi, 2019. "Government Regulations on Closed-Loop Supply Chain with Evolutionarily Stable Strategy," Sustainability, MDPI, vol. 11(18), pages 1-29, September.

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