Multiproduct vendor selection with volume discounts as the fuzzy multi-objective programming problem

Abstract

Vendor selection in supply chain is a multi-criteria problem that involves a number of quantitative and qualitative factors. This paper deals with a concrete problem of flour purchase by a company that manufactures bakery products. The selection process is driven by the price, reliability and quality objectives of the buyer and is subject to the capacity constraints of the vendors in the situation where all suppliers offer several kinds of flour (multiproduct situation). Vendors often offer quantity discounts, i.e. the purchasing price of flour depends on the quantity ordered. The multiproduct situation complicates the mathematical formulation of the problem and in this context it is much more convenient to consider the discounts of the money volume of business with every vendor. This problem has been solved using an integration of analytic hierarchy process (AHP), weighted sum model (WSM) and fuzzy multi-objective mixed-integer programming to define the optimum quantities among the selected suppliers.

Keywords:

• vendor selection
• volume discounts
• multiproduct
• AHP
• fuzzy programming