A mixed integer non-linear model for supplier selection under conditions of Incremental quantity discount and inventory shortage

In supply chain management process, the firm select best supplier takes the competitive advantage to other companies. Thus, supplier selection is an important issue. In this paper, a quantity discount situation, which plays a role of motivate for buyer, is considered. To the best of our knowledge, it is the first study in the literature that considers both inventory shortage and incremental discount nature of supplier selection process. This paper develops a mixed integer nonlinear programming model to coordinate the system of a single buyer and multiple vendors under an incremental quantity discount policy for the vendors. To solve the proposed SCM model a harmony search algorithm is applied. The results show that the applied algorithm works properly in the term of both CPU time and the quality of solutions

Keywords:

Supplier selection , supply chain , Incremental discount , backlog ordering