A Model for Allocating Orders to Suppliers in Case of Quantity Discounts

Abstract

One of the most important activities in the management of input items of a company is focusing on the process of purchasing, supplier selection and allocating order to suppliers. Decisions about supplier selection due to simultaneously taking inconsistent and diverse issues into account in a wide range of strategic to operational factors, and from quantitative to qualitative criteria will be complex by nature. In order to select the best suppliers it is necessary to make a trade-off between these tangible and intangible factors some of which may conflict. When business volume discounts exist, this problem becomes more complicated. In this paper a multi-objective model for order allocation under volume discount conditions is presented. In this context, suppliers offer price discounts on total business volume. A solution methodology is presented to solve the multi-objective model, and the model is illustrated using a numerical example. Studying various combinations of constraints such as capacity, timely delivery, disadvantages and cost, taking into account quantity discounts, considering the weight of the suppliers in order allocation and integration of these cases with each other, have made the current research quite unique.