TITLE:
Models for Ordering Multiple Products Subject to Multiple Constraints, Quantity and Freight Discounts
AUTHORS:
John Moussourakis, Cengiz Haksever
KEYWORDS:
Inventory; Mixed-Integer Linear Programming; Quantity and Freight Discounts; All-Units and Incremental Discounts; Multiple Products and Multiple Constraints
JOURNAL NAME:
American Journal of Operations Research,
Vol.3 No.6,
November
8,
2013
ABSTRACT: One of the most important responsibilities of a supply chain manager
is to decide “how much” (or “many”) of inventory items to order and how to
transport them. This paper presents four mixed-integer linear programming
models to help supply chain managers make these decisions for multiple products
subject to multiple constraints when suppliers offer quantity discounts and
shippers offer freight discounts. Each model deals with one of the possible
combinations of all-units, incremental quantity discounts, all-weight and
incremental freight discounts. The models are based on a piecewise linear
approximation of the number of orders function. They allow any number of linear
constraints and determine if independent or common (fixed) cycle ordering has a lower
total cost. Results of computational experiments on an example problem are also
presented.