Title: Quantity discount decisions considering multiple suppliers with capacity and quality restrictions

Authors: Hamza Adeinat; José A. Ventura

Addresses: Harold and Inge Marcus Department of Industrial and Manufacturing Engineering, The Pennsylvania State University, University Park, PA 16802, USA ' Harold and Inge Marcus Department of Industrial and Manufacturing Engineering, The Pennsylvania State University, University Park, PA 16802, USA

Abstract: This article considers a supply chain inventory problem for a particular type of raw material with multiple suppliers, where each supplier offers all-unit quantity discounts as a motivation mechanism to increase the placed order quantities, and hence reduce the average the replenishment cost. In addition, multiple orders to the selected suppliers with different frequencies are allowed during a repeating order cycle. In this research, we propose a mixed integer nonlinear programming (MINLP) model to find the optimal number of orders and corresponding order quantities for the selected suppliers that minimise the total replenishment and inventory cost per time unit under suppliers' capacity and quality constraints. A numerical example is provided to illustrate the proposed MINLP model. We also compare the results of our model with those from other researchers, where at most one order can be allocated to each supplier per repeating order cycle.

Keywords: supplier selection; supply chain inventory; all-unit quantity discounts; mixed integer nonlinear programming; MINLP; supply chain management; SCM; raw materials; replenishment cost; order quantities; inventory costs; capacity constraints; quality constraints; inventory management.

DOI: 10.1504/IJIR.2015.073934

International Journal of Inventory Research, 2015 Vol.2 No.4, pp.223 - 238

Published online: 30 Dec 2015 *

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