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.

► A MINLP model is developed for the problem.
► It is shown that the problem is NP hard in nature.
► Genetic algorithm (GA) approach is used to solve the problem.
► The cost of supplier has more influence on order quantity allocation.
► The supplier with higher discount receives more order quantity.