Multiple sourcing under supplier failure risk and quantity discount: A genetic algorithm approach

This paper investigates an order allocation problem of a manufacturer/buyer among multiple suppliers under the risks of supply disruption. A mixed integer non‐linear programming (MINLP) model is developed for order allocation considering different capacity, failure probability and quantity discounts for each supplier. We have shown that the formulated problem is NP‐hard in nature and genetic algorithm (GA) approach is used to solve it. The model is illustrated through a numerical study and the result portrays that the cost of supplier has more influence on order quantity allocation rather than supplier’s failure probability.