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Vendor Selection with Bundling: A Comment *
Author(s) -
Sarkis Joseph,
Semple John H.
Publication year - 1999
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.1540-5915.1999.tb01609.x
Subject(s) - vendor , purchasing , bundle , integer programming , computer science , selection (genetic algorithm) , operations research , workload , business , microeconomics , economics , marketing , mathematics , algorithm , artificial intelligence , operating system , materials science , composite material
In a recent article by Rosenthal, Zydiak, and Chaudhry (1995), a mixed integer linear programming model was introduced to solve the vendor selection problem for the case in which the vendor can sell items individually or as part of a bundle. Each vendor offered only one type of bundle, and the buyer could purchase at most one bundle per vendor. The model employed n(m + 1) binary variables, where n is the number of vendors and m is the number of products they sell. The existing model can lead to a purchasing paradox: it may force the buyer to pay more to receive less. We suggest a reformulation of the same problem that (i) eliminates this paradox and reveals a more cost‐effective purchasing strategy; (ii) uses only n integer variables and significantly reduces the computational workload; and (iii) permits the buyer to purchase more than one bundle per vendor.