Goldengorin, Boris; Keane, John; Kuzmenko, Viktor; Tso, Michael Optimal order allocation with discount pricing. (English) Zbl 1137.91447 Kao, Ming-Yang (ed.) et al., Algorithmic aspects in information and management. Third international conference, AAIM 2007, Portland, OR, USA, June 6–8, 2007. Proceedings. Berlin: Springer (ISBN 978-3-540-72868-9/pbk). Lecture Notes in Computer Science 4508, 273-284 (2007). Summary: 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.For the entire collection see [Zbl 1120.90001]. MSC: 91B28 Finance etc. (MSC2000) 91B24 Microeconomic theory (price theory and economic markets) Keywords:Online pricing; Discount schedules; Location problems; Branch and bound Software:LINGO; XPRESS PDFBibTeX XMLCite \textit{B. Goldengorin} et al., Lect. Notes Comput. Sci. 4508, 273--284 (2007; Zbl 1137.91447) Full Text: DOI