Order splitting with multiple capacitated suppliers

Order splitting with multiple capacitated suppliers

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Article ID: iaor20084427
Country: Netherlands
Volume: 178
Issue: 2
Start Page Number: 421
End Page Number: 432
Publication Date: Apr 2007
Journal: European Journal of Operational Research
Authors:
Keywords: programming: dynamic
Abstract:

This paper studies an integrated decision making model for a supply chain system where a manufacturer faces a price-sensitive demand and multiple capacitated suppliers, two issues that are often considered separately in the literature. The goal is to maximize total profit by determining optimal selling price and at the same time acquiring enough supplying capacity. The problem is proved to be NP-hard in the ordinary sense, a heuristic algorithm and an optimal dynamic programming algorithm are developed. Computational experiments are conducted to study the efficiency and effectiveness of the algorithms. Some managerial insights are observed.

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