Multi-criteria Approaches to Supplier Selection and Order Allocation with Quqntity Discounts

Open Access
Chen, Yuda
Graduate Program:
Industrial Engineering
Master of Science
Document Type:
Master Thesis
Date of Defense:
Committee Members:
  • Arunachalam Ravindran, Thesis Advisor
  • Supplier selection
  • Goal Programming
  • Allocation problem
In this thesis, a multi-criteria multi-period supplier selection and order allocation problem is studied. The supply chain system is modeled with a single buyer and multiple suppliers with deterministic demands as a mixed integer programming problem. Five objectives are included in the multi-period and multi-sourcing problem. All-unit quantity discount policy is also incorporated in the model. The five objectives considered are (1) procurement cost; (2) weighted average inventory; (3) weighted average shortage; (4) weighted average lead time (5) weighted average quality defect rate. Model constraints include demand balance constraints, all-unit discount policy constraints and capacity constraints of the suppliers. Weighted objective method and Goal programming methods (both preemptive and non-preemptive) are utilized to solve the multi-criteria mathematical programming problem. Weighted objective method is used to generate several efficient solutions by applying different sets of weights assigned to the five criteria. In both Preemptive goal programming and Non-preemptive goal programming, the specified goals for the five objectives are satisfied according to the decision maker’s preference. A numerical example is presented to illustrate the Weighted objective and Goal programming methods. Twelves efficient solutions are analyzed visually through the Value Path Approach. A sensitivity analysis is conducted to study the impact of varying inventory factors and shortage factors on the optimal sourcing decisions.