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A Heuristic Algorithm for the Capacitated Multiple Supplier Inventory Grouping Problem
Author(s) -
Syam Siddhartha S.,
Shetty Bala
Publication year - 1996
Publication title -
decision sciences
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.238
H-Index - 108
eISSN - 1540-5915
pISSN - 0011-7315
DOI - 10.1111/j.1540-5915.1996.tb01832.x
Subject(s) - computer science , purchasing , mathematical optimization , subgradient method , heuristic , integer programming , inventory management , inventory control , minification , operations research , inventory theory , algorithm , operations management , mathematics , economics
This paper presents and solves a model for the multiple supplier inventory grouping problem, which involves the minimization of logistics costs for a firm that has multiple suppliers with capacity limitations. The costs included in the model are purchasing, transportation, ordering, and inventory holding, while the firm's objective is to determine the optimal flows and groups of commodities from each supplier. We present an algorithm, which combines subgradient optimization and a primal heuristic, to quickly solve the multiple supplier inventory grouping problem. Our algorithm is tested extensively on problems of various sizes and structures, and its performance is compared to that of OSL, a state‐of‐the‐art integer programming code. The computational results indicate that our approach is extremely efficient for solving the multiple supplier inventory grouping problem.