Solving a stochastic demand multi-product supplier selection model with service level and budget constraints using Genetic Algorithm

This study presents a stochastic demand multi-product supplier selection model with service level and budget constraints using Genetic Algorithm. Recently, much attention has been given to stochastic demand due to uncertainty in the real world. Conflicting objectives also exist between profit, service level and resource utilization. In this study, the relationship between the expected profit and the number of trials as well as between the expected profit and the combination of mutation and crossover rates are investigated to identify better parameter values to efficiently run the Genetic Algorithm. Pareto optimal solutions and return on investment are analyzed to provide decision makers with the alternative options of achieving the proper budget and service level. The results show that the optimal value for the return on investment and the expected profit are obtained with a certain budget and service level constraint.

► We develop a single buyer, stochastic demand, multi-product supplier selection model using GA.
► Optimal expected profit and the return on investment are derived.
► Provides managerial insights for decision makers under the budget and service level control.