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This study investigates a multiple-supplier selection problem in which a firm or buyer aims to find an optimal set of suppliers to satisfy its demand for multiple components for a planning horizon. A distinctive feature of our problem formulation is to integrate decisions relevant to supplier selection, such as determining the order quantities from each supplier under price discounts and the order collection routes for multiple vehicles. In other words, the traveling purchaser problem is combined with multiple supplier selection. A new mixed-integer programming model is developed to optimally solve this problem. The model considers costs of inventory holding, ordering, transportation and purchasing along with supplier’s supply capacity, vehicle capacity constraints. A numerical example is provided to illustrate how the model is executed. Scenario analysis is performed to assess the model’s results under varying conditions.

Modeling and Analysis of Multiple-Supplier Selection Problem with Price Discounts and Routing Decisions