Optimizing the new coordinated replenishment and delivery model considering quantity discount and resource constraints

Under a global purchasing environment, more and more companies have realized that considerable cost savings can be achieved through a coordinated replenishment and delivery (CRD) strategy. A new and practical CRD model with quantity discount (D-CRD) and its extension with constraints (CD-CRD) are proposed. Several important properties of the proposed D-CRD and CD-CRD policies are presented. A heuristic based on these properties and a hybrid Tabu search algorithm is designed to obtain satisfactory solutions for D-CRD and CD-CRD. Computational results demonstrate the effectiveness and efficiency of the algorithms. Although D-CRD is more efficient than CRD, resource constraints significantly weaken the effects of quantity discount strategy, especially for large-scale problems. Moreover, constraints in the coordinated stage are more sensitive than constraints in the delivery stage.