Supplier selection and order splitting in multiple-sourcing inventory systems

Abstract

Supplier selection and inventory control are critical decision processes in single-item multiple-supplier systems. An integer linear programming model is proposed to help managers determine the reorder level, choose the best suppliers, and place the optimum order quantities so that the total average inventory cost is minimum, and constraints of supplier ability, quality, and demand are considered. An algorithm combining the branch-bound algorithm and enumeration algorithm is developed to solve the problems. Application of the proposed model in an automobile industry shows that it is effective.

References

1. Stefan M Multiple-supplierinventory models in supply chain management: a reviewInternational Journal of Production Economics2003(81) 265279
2. Qi Xiangtong Order splitting with multiple capacitated suppliersEuropean Journal of Operational Research2007(178)421432
3. Sculli D Wu S Y Stock control with two suppliersand normal lead times. The Journal of the Operational Research Society. 1981 32 10031009
4. Sculli D Shum Y W Analysis of a continuous reviewstock-control model with multiple suppliersThe journal of the Operational Research Society 1990 41(9)873877
5. Zhao Longgeng Lau Honshiang Reducing inventory costs andchoosing suppliers with order splittingThe journal of the Operational Research Society 1992 43(10) 10031008
6. Goyal S K Reducinginventory costs and choosing suppliers with order splittingThe journal of the Operational Research Society 1993 144(5) 529530
7. Fong D K H Gempesaw V M Ord J K Analysis of a dual sourcing inventory model with normalunit demand and erlang mixture lead timesEuropean Journal of Operational Research 2000 120 97107
8. Ryu S W Lee K K A stochastic inventory modelof dual sourced supply chain with lead-time reductionInternational Journal of Production Economics 2003 81–82513524
9. Ghodsypour S H Brien C O The total cost of logisticsin supplier selection, under conditions of multiple sourcing, multiplecriteria and capacity constraintInternationalJournal of Production Economics 2001 731527
10. Dai Tinglong Qi Xiangtong An acquisition policy for amulti-supplier system with a finite-time horizonComputer & Operations Research 2007 34 27582773
11. Sedarage D Fujiwara O Luong H T Determining optimal order splitting and reorder level for N-supplier inventory systemsEuropean Journalof Operational Research 1999 116389404
12. Thomas D J Tyworth J E Polling lead-time risk by ordersplitting: A critical reviewTransportationResearch Part E 2006 42245257