Order allocation in a multiple-supplier environment

The objective of this article is to study the effects of an order allocation procedure in a supply chain. This supply chain consists of a company that can order products from multiple suppliers. At any time of an order, decisions have to be made by the company concerning the allocation of products to the suppliers and the respective order quantities, so that the total purchasing cost is minimized, while maintaining a specified service level. For this purpose, we have developed a solution algorithm and tested it to examine its effectiveness in terms of the service level and the company's total purchasing cost. The final section of the paper summarizes the conclusions of this study and suggests directions for future research.