An integrated lot-sizing model with supplier and carrier selection and quantity discounts considering multiple products

Abstract

Because of growing competition in the global markets and the vital role of suppliers in business success, the subject of supplier selection has attracted many researchers and practitioners during the recent years. In this study, in addition to supplier selection, the order quantity discount provided by the suppliers is considered through a new Mixed-Integer Linear Programming (MILP) model involving a manufacturer with multiple products and multiple purchasing items over multiple periods. In the proposed model, the manufacturer purchases different amounts of raw materials from selected suppliers in order to produce different products. Demands of customers are fulfilled by minimizing the total purchase, inventory, production, and transportation costs over a multi-period planning horizon. Since the problem was NP-hard, an efficient Genetic Algorithm (GA) was used to solve the large-scale real-world instances. The results were compared with the results from the exact approach wherever possible in order to investigate the efficiency of the algorithm.