Journal of the Operational Research Society

, Volume 65, Issue 11, pp 1636–1648 | Cite as

Multi-period supplier selection under price uncertainty

  • Alper Şen
  • Hande Yaman
  • Kemal Güler
  • Evren Körpeoğlu
General Paper


We consider a problem faced by a procurement manager who needs to purchase a large volume of multiple items over multiple periods from multiple suppliers that provide base prices and discounts. Discounts are contingent on meeting various conditions on total volume or spend, and some are tied to future realizations of random events that can be mutually verified. We formulate a scenario-based multi-stage stochastic optimization model that allows us to consider random events such as a drop in price because of the most favoured customer clauses, a price change in the spot market or a new discount offer. We propose certainty-equivalent heuristics and evaluate the regret of using them. We use our model for three bidding events of a large manufacturing company. The results show that considering most favored customer clauses in supplier offers may create substantial savings that may surpass the savings from regular discount offers.


supplier selection quantity discounts price uncertainty most favoured customer multi-stage stochastic programming 


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Copyright information

© Operational Research Society Ltd. 2013

Authors and Affiliations

  • Alper Şen
    • 1
  • Hande Yaman
    • 1
  • Kemal Güler
    • 2
  • Evren Körpeoğlu
    • 2
  1. 1.Bilkent UniversityAnkaraTurkey
  2. 2.Hewlett-Packard LaboratoriesPalo AltoUSA

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