A solution procedure for mixed-integer nonlinear programming formulation of supply chain planning with quantity discounts under demand uncertainty

Sisi Yin, Tatsushi Nishi

Research output: Contribution to journalArticlepeer-review

18 Citations (Scopus)

Abstract

Quantity discount policy is decision-making for trade-off prices between suppliers and manufacturers while production is changeable due to demand fluctuations in a real market. In this paper, quantity discount models which consider selection of contract suppliers, production quantity and inventory simultaneously are addressed. The supply chain planning problem with quantity discounts under demand uncertainty is formulated as a mixed-integer nonlinear programming problem (MINLP) with integral terms. We apply an outer-approximation method to solve MINLP problems. In order to improve the efficiency of the proposed method, the problem is reformulated as a stochastic model replacing the integral terms by using a normalisation technique. We present numerical examples to demonstrate the efficiency of the proposed method.

Original languageEnglish
Pages (from-to)2354-2365
Number of pages12
JournalInternational Journal of Systems Science
Volume45
Issue number11
DOIs
Publication statusPublished - Nov 2 2014
Externally publishedYes

Keywords

  • Demand uncertainty
  • Outer approximation
  • Quantity discounts
  • Supply chain optimisation

ASJC Scopus subject areas

  • Control and Systems Engineering
  • Theoretical Computer Science
  • Computer Science Applications

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