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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)

Software:

LINGO; XPRESS
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