 Optimal sourcing from alternative capacitated suppliers with general cost structuresTarkan Tan and Osman Alp Omega, 2016, vol. 58, issue C, 26-32 Abstract: Most manufacturers or retailers must procure items or services necessary for their businesses, in an environment that typically includes a number of competing suppliers with varying cost structures, price schemes, and capacities. In this paper, we consider the sourcing problem in which the buyer determines the sources that should be utilized and to what extent, in turn, dictating the total quantity available for the buyer to sell/utilize, subject to stochastic demand/requirement. Our approach advocates not to determine the quantity to be sourced a priori. We allow for capacitated sources and any cost structure in which fixed costs and quantity discounts are special cases. Some simpler versions of this problem are shown to be NP-hard in the literature. By proving that the order of the sources is irrelevant for the optimal solution, we devise a dynamic programming model with pseudo-polynomial complexity to solve the multiple supplier sourcing problem to optimality. We propose two extensions: one limits the number of suppliers, and the other allows multi-period sourcing. Keywords: Operations management; Inventory control; Value chain; Sourcing; Procurement (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jomega:v:58:y:2016:i:c:p:26-32 Ordering information: This journal article can be ordered from DOI: 10.1016/j.omega.2015.03.011 Access Statistics for this article Omega is currently edited by B. Lev More articles in Omega from Elsevier |
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