Order quantity allocation for total inventory cost optimisation to selected suppliers through VIKOR technique Online publication date: Wed, 17-Jun-2020
by A. Naga Phaneendra; V. Diwakar Reddy; G. Sankaraiah
International Journal of Industrial and Systems Engineering (IJISE), Vol. 35, No. 3, 2020
Abstract: In modern era, no. of potential suppliers for the industries are considerably increased and minimisation of total inventory cost becomes complicated. In response to the concern, we present and address the problem in two stages which efficiently assists to figure out the best suppliers among many and allocates order quantity to each supplier so as to mitigate overall inventory cost. Firstly, potential suppliers are listed and quantitative, qualitative data are collected based on opinion and judgemental survey. The normalised data is represented in square matrix and ranking is awarded to suppliers using utility measures and regret measures. Secondly, the fitness function is formulated and necessary constraints that primarily influences objective function is framed as nonlinear programming model. Further, the model is solved using LINDO software for its optimal solutions. The results show that the model considerably reduces total cost function as no. of orders from customer's increases.
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