A multi-product, multi-supplier, multi-period and multi- price discount levels supplier selection and order allocation model under demand uncertainty

Open Access
Phansalkar, Swapnil Chintamani
Graduate Program:
Industrial Engineering
Master of Science
Document Type:
Master Thesis
Date of Defense:
Committee Members:
  • M Jeya Chandra, Thesis Advisor
  • normal distribution of demand
  • minimum cost
  • minimum defects
  • minimum weighted average lead time
In this thesis, a multi criteria decision making model for supplier selection and order allocation is developed under demand uncertainty. The primary goal of this model is to assist the buyer in making the decision regarding the selection of suppliers and allocation of order quantities to the selected suppliers to satisfy demand for each product in every time period. The multi criteria decision making model has the following three objectives: to minimize the total cost over planning horizon, to minimize the total number of quality defects and to minimize the weighted average lead time. The demand is assumed to follow normal distribution and shortages are allowed in this model. Further, each supplier is assumed to provide all unit type of price discount for each part. A mathematical formulation is done for each objective and then a general model for multiple products, multiple suppliers, multiple time periods and multiple price discount levels is developed. The multi criteria model includes the buyer’s demand constraints, the supplier’s capacity constraints and the supplier’s price break constraints. The following decisions are to be made in this model: to select the appropriate suppliers considering the objectives of the model and to determine the optimal order quantity from the selected suppliers to satisfy the buyer’s demand for each time period. This model uses weighted objective method to determine the optimal solution to the multi criteria decision making problem.