Decision making of sourcing and order allocation with price discounts

This paper applied a mixed integer programming approach to solve the sourcing and order allocation problem with multiple products and multiple suppliers in a supply chain. The decision process is driven by multiple objectives and a set of constraints. Two schemes of quantity discounts are used to compare the influence upon the buying decisions. An example and an experimental test are presented to demonstrate the effectiveness of the model. The computational solutions are a valuable tool to eliminate much of the subjectivity that impacts decisions under complex situations. A graphical display for the solutions is provided which can assist DMs in making decisions among criteria.