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A variable neighborhood search heuristic for supply chain coordination using dynamic price discounts

Viktoryia Buhayenko (), Sin C. Ho and Anders Thorstenson
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Viktoryia Buhayenko: Aarhus University
Sin C. Ho: The Chinese University of Hong Kong
Anders Thorstenson: Aarhus University

EURO Journal on Transportation and Logistics, 2018, vol. 7, issue 4, No 4, 363-385

Abstract: Abstract This research studies the problem of supply chain coordination using temporary price discounts. The supplier decides how much discount should be introduced in each period to each of the customers, aiming to maximize its profit, while giving the customers the incentive to order in the desired periods. To solve this problem, a variable neighborhood search is introduced. The results of computational experiments indicate that the variable neighborhood search outperforms the mixed integer-based heuristic introduced earlier in the literature for this problem. Our metaheuristic procedure found the optimal solution for small instances in more than 80% of the cases. Moreover, an advantage of this metaheuristic is the significantly shorter computing time that allows applying it to larger instances.

Keywords: Discounts; Metaheuristics; Variable neighborhood search; Supply chain coordination; Dynamic lot sizing (search for similar items in EconPapers)
Date: 2018
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