The supplier selection problem with quantity discounts and truckload shipping

Renata Mansini, Martin W.P. Savelsbergh and Barbara Tocchella

Omega, 2012, vol. 40, issue 4, 445-455

Abstract: 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.

Keywords: Supplier selection; Quantity discounts; Truckload shipping rates; Integer programming (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (31)

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DOI: 10.1016/j.omega.2011.09.001

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