Abstract
We consider optimal order allocation (or procurement) problems with discount pricing and fixed charges. Such a problem is faced for example by an internet trading agent who seeks to fulfil an order for specified amounts of several products from a pre-arranged list of suppliers, taking into account availability and price. We present a mixed integer programming (MILP) formulation assuming that suppliers impose a discount schedule with multiple price breaks including fixed charges. We show that a modified capacitated facility location problem (CFLP) model is appropriate for the general case under consideration and outline a Lagrangean relaxation approach improved by open and close penalties. Our experimental results show that problems arising in practice can be handled within seconds by either LINGO or XPress-MP software.
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Goldengorin, B., Keane, J., Kuzmenko, V., Tso, M. (2007). Optimal Order Allocation with Discount Pricing. In: Kao, MY., Li, XY. (eds) Algorithmic Aspects in Information and Management. AAIM 2007. Lecture Notes in Computer Science, vol 4508. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-72870-2_26
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DOI: https://doi.org/10.1007/978-3-540-72870-2_26
Publisher Name: Springer, Berlin, Heidelberg
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