An optimization technique for vendor selection with quantity discounts using Genetic Algorithm

Authors

1 Assistant Professor, Dep. of Mechanical Engineering, St. Joseph's College of Engineering, Chennai 600 119, India

2 Professor, Head of the Central Workshop Division, Dep. of Mechanical Eng., Anna University, Chennai 600 025, India

3 Graduate Research Assistant, Dep. of Mechanical Engineering, University of Texas at Austin

Abstract

Vendor selection decisions are complicated by the fact that various conflicting multi-objective factors must be considered in the decision making process. The problem of vendor selection becomes still more compli-cated with the inclusion of incremental discount pricing schedule. Such hard combinatorial problems when solved using meta heuristics produce near optimal solutions. This paper proposes a multi-component multiple vendor selection model with vendors offering quantity discounts. This problem is then evaluated using Ge-netic Algorithm with a case study approach. Combinatorial approach is used to group the vendors for selec-tion and Genetic Algorithm to allocate the optimal order quantities for each vendor.

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