IDEAS home Printed from https://ideas.repec.org/a/eee/ejores/v279y2019i2p393-406.html
   My bibliography  Save this article

A multi-period multi-commodity lot-sizing problem with supplier selection, storage selection and discounts for the process industry

Author

Listed:
  • Kirschstein, Thomas
  • Meisel, Frank

Abstract

In this paper we consider the sourcing process of a production facility from the process industry. The production facility sources raw materials from a set of suppliers that offer different discount schemes. For storing raw materials, heterogeneous storage facilities can be used, which vary with respect to their associated costs and capacities. We formulate the corresponding planning problem of selecting suppliers and storage facilities as well as determining order quantities and transport flows under the discount schemes offered by the suppliers. For solving large problem instances, a heuristic based on kernel search is proposed and evaluated in a real world case study. The case study reveals that supplier selection and storage selection are highly interdependent decisions. By integrating both perspectives, significant savings can be generated. It turns out that single-sourcing is the dominant strategy for most raw materials. However, the selection of the optimal suppliers depends on both the prices offered by the suppliers as well as the associated logistics costs for transportation and stock-holding.

Suggested Citation

  • Kirschstein, Thomas & Meisel, Frank, 2019. "A multi-period multi-commodity lot-sizing problem with supplier selection, storage selection and discounts for the process industry," European Journal of Operational Research, Elsevier, vol. 279(2), pages 393-406.
    • Handle: RePEc:eee:ejores:v:279:y:2019:i:2:p:393-406
    DOI: 10.1016/j.ejor.2019.05.039
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0377221719304692
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ejor.2019.05.039?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jackson, Jonathan E. & Munson, Charles L., 2016. "Shared resource capacity expansion decisions for multiple products with quantity discounts," European Journal of Operational Research, Elsevier, vol. 253(3), pages 602-613.
    2. Manerba, Daniele & Mansini, Renata & Perboli, Guido, 2018. "The Capacitated Supplier Selection problem with Total Quantity Discount policy and Activation Costs under uncertainty," International Journal of Production Economics, Elsevier, vol. 198(C), pages 119-132.
    3. Mansini, Renata & Savelsbergh, Martin W.P. & Tocchella, Barbara, 2012. "The supplier selection problem with quantity discounts and truckload shipping," Omega, Elsevier, vol. 40(4), pages 445-455.
    4. Guastaroba, G. & Savelsbergh, M. & Speranza, M.G., 2017. "Adaptive Kernel Search: A heuristic for solving Mixed Integer linear Programs," European Journal of Operational Research, Elsevier, vol. 263(3), pages 789-804.
    5. Jiefeng Xu & Leonard L. Lu, 1998. "The dynamic lot size model with quantity discount: Counterexamples and correction," Naval Research Logistics (NRL), John Wiley & Sons, vol. 45(4), pages 419-422, June.
    6. Benton, W. C. & Park, Seungwook, 1996. "A classification of literature on determining the lot size under quantity discounts," European Journal of Operational Research, Elsevier, vol. 92(2), pages 219-238, July.
    7. Goossens, D.R. & Maas, A.J.T. & Spieksma, F.C.R. & van de Klundert, J.J., 2007. "Exact algorithms for procurement problems under a total quantity discount structure," European Journal of Operational Research, Elsevier, vol. 178(2), pages 603-626, April.
    8. Awi Federgruen & Chung‐Yee Lee, 1990. "The dynamic lot size model with quantity discount," Naval Research Logistics (NRL), John Wiley & Sons, vol. 37(5), pages 707-713, October.
    9. Aria Shahsavar & Nima Zoraghi & Babak Abbasi, 2018. "Integration of resource investment problem with quantity discount problem in material ordering for minimizing resource costs of projects," Operational Research, Springer, vol. 18(2), pages 315-342, July.
    10. Enrico Angelelli & Renata Mansini & M. Speranza, 2012. "Kernel Search: a new heuristic framework for portfolio selection," Computational Optimization and Applications, Springer, vol. 51(1), pages 345-361, January.
    11. Munson, Charles L. & Jackson, Jonathan, 2015. "Quantity Discounts: An Overview and Practical Guide for Buyers and Sellers," Foundations and Trends(R) in Technology, Information and Operations Management, now publishers, vol. 8(1-2), pages 1-130, June.
    12. Anantaram Balakrishnan & Harihara Prasad Natarajan, 2014. "Integrated Procurement Planning in Multi-division Firms," Production and Operations Management, Production and Operations Management Society, vol. 23(10), pages 1795-1810, October.
    13. Crama, Y. & Pascual J., R. & Torres, A., 2004. "Optimal procurement decisions in the presence of total quantity discounts and alternative product recipes," European Journal of Operational Research, Elsevier, vol. 159(2), pages 364-378, December.
    14. Chaudhry, Sohail S. & Forst, Frank G. & Zydiak, James L., 1993. "Vendor selection with price breaks," European Journal of Operational Research, Elsevier, vol. 70(1), pages 52-66, October.
    15. Manerba, Daniele & Mansini, Renata, 2012. "An exact algorithm for the Capacitated Total Quantity Discount Problem," European Journal of Operational Research, Elsevier, vol. 222(2), pages 287-300.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wang, Fa & Chen, Jing & Yang, Hui & Yu, Bo, 2022. "Supplier selection with information disclosure in the presence of uninformed consumers," International Journal of Production Economics, Elsevier, vol. 243(C).
    2. Mehdi Soltanifar & Hamid Sharafi, 2022. "A modified DEA cross efficiency method with negative data and its application in supplier selection," Journal of Combinatorial Optimization, Springer, vol. 43(1), pages 265-296, January.
    3. Li, Zhaolin & Ou, Jinwen & Liang, Guitian, 2021. "Optimizing hospital drug procurement with rebate contracts," Omega, Elsevier, vol. 105(C).
    4. Shuai Wang & Jizhuang Hui & Bin Zhu & Ying Liu, 2022. "Adaptive Genetic Algorithm Based on Fuzzy Reasoning for the Multilevel Capacitated Lot-Sizing Problem with Energy Consumption in Synchronizer Production," Sustainability, MDPI, vol. 14(9), pages 1-24, April.
    5. Zhili Jia & Liyi Liu & Zhaofeng Diao, 2024. "A Group Intuitionistic Fuzzy Exponential TODIM Method Considering Attribute Interactions Applied to Green Building Material Supplier Selection," Sustainability, MDPI, vol. 16(18), pages 1-24, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yang, Liu & Millstein, Mitch A. & Campbell, James F., 2022. "Unlocking cost savings hidden in hospital tier contracts," Omega, Elsevier, vol. 113(C).
    2. Li, Zhaolin & Ou, Jinwen & Liang, Guitian, 2021. "Optimizing hospital drug procurement with rebate contracts," Omega, Elsevier, vol. 105(C).
    3. Manerba, Daniele & Mansini, Renata & Perboli, Guido, 2018. "The Capacitated Supplier Selection problem with Total Quantity Discount policy and Activation Costs under uncertainty," International Journal of Production Economics, Elsevier, vol. 198(C), pages 119-132.
    4. Aria Shahsavar & Nima Zoraghi & Babak Abbasi, 2018. "Integration of resource investment problem with quantity discount problem in material ordering for minimizing resource costs of projects," Operational Research, Springer, vol. 18(2), pages 315-342, July.
    5. Song, Zhuzhu & Tang, Wansheng & Zhao, Ruiqing, 2019. "Encroachment and canvassing strategy in a sea-cargo service chain with empty container repositioning," European Journal of Operational Research, Elsevier, vol. 276(1), pages 175-186.
    6. Chung‐Lun Li & Jinwen Ou & Vernon N. Hsu, 2012. "Dynamic lot sizing with all‐units discount and resales," Naval Research Logistics (NRL), John Wiley & Sons, vol. 59(3‐4), pages 230-243, April.
    7. Jackson, Jonathan E. & Munson, Charles L., 2019. "Common replenishment cycle order policies for multiple products with capacity expansion opportunities and quantity discounts," International Journal of Production Economics, Elsevier, vol. 218(C), pages 170-184.
    8. Li, Xin & Ventura, José A. & Venegas, Bárbara B. & Kweon, Sang Jin & Hwang, Seong Wook, 2018. "An integrated acquisition policy for supplier selection and lot sizing considering total quantity discounts and a quality constraint," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 119(C), pages 19-40.
    9. Qin, Hu & Luo, Meifeng & Gao, Xiang & Lim, Andrew, 2012. "The freight allocation problem with all-units quantity-based discount: A heuristic algorithm," Omega, Elsevier, vol. 40(4), pages 415-423.
    10. Jose L. Andrade-Pineda & David Canca & Pedro L. Gonzalez-R, 2017. "On modelling non-linear quantity discounts in a supplier selection problem by mixed linear integer optimization," Annals of Operations Research, Springer, vol. 258(2), pages 301-346, November.
    11. Munson, C.L. & Hu, J., 2010. "Incorporating quantity discounts and their inventory impacts into the centralized purchasing decision," European Journal of Operational Research, Elsevier, vol. 201(2), pages 581-592, March.
    12. Bichler, Martin & Schneider, Stefan & Guler, Kemal & Sayal, Mehmet, 2011. "Compact bidding languages and supplier selection for markets with economies of scale and scope," European Journal of Operational Research, Elsevier, vol. 214(1), pages 67-77, October.
    13. Bianchessi, N. & Mansini, R. & Speranza, M.G., 2014. "The distance constrained multiple vehicle traveling purchaser problem," European Journal of Operational Research, Elsevier, vol. 235(1), pages 73-87.
    14. Degraeve, Zeger & Roodhooft, Filip, 1999. "Improving the efficiency of the purchasing process using total cost of ownership information: The case of heating electrodes at Cockerill Sambre S.A," European Journal of Operational Research, Elsevier, vol. 112(1), pages 42-53, January.
    15. Mancini, Simona & Triki, Chefi & Piya, Sujan, 2022. "Optimal selection of touristic packages based on user preferences during sports mega-events," European Journal of Operational Research, Elsevier, vol. 302(3), pages 819-830.
    16. Jackson, Jonathan E. & Munson, Charles L., 2016. "Shared resource capacity expansion decisions for multiple products with quantity discounts," European Journal of Operational Research, Elsevier, vol. 253(3), pages 602-613.
    17. Sandun C. Perera & Suresh P. Sethi, 2023. "A survey of stochastic inventory models with fixed costs: Optimality of (s, S) and (s, S)‐type policies—Continuous‐time case," Production and Operations Management, Production and Operations Management Society, vol. 32(1), pages 154-169, January.
    18. Hu, Shaolong & Dong, Zhijie Sasha & Lev, Benjamin, 2022. "Supplier selection in disaster operations management: Review and research gap identification," Socio-Economic Planning Sciences, Elsevier, vol. 82(PB).
    19. Z. Degraeve & Eva Labro & F. Roodhooft, 2005. "Constructing a Total Cost of Ownership supplier selection methodology based on Activity-Based Costing and mathematical programming," Accounting and Business Research, Taylor & Francis Journals, vol. 35(1), pages 3-27.
    20. Sisi Yin & Tatsushi Nishi, 2014. "A solution procedure for mixed-integer nonlinear programming formulation of supply chain planning with quantity discounts under demand uncertainty," International Journal of Systems Science, Taylor & Francis Journals, vol. 45(11), pages 2354-2365, November.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ejores:v:279:y:2019:i:2:p:393-406. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eor .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.