A multi supplier lot sizing strategy using dynamic programming

Abstract

In this paper, the problem of lot sizing for the case of a single item is considered along with supplier selection in a two-stage supply chain. The suppliers are able to offer quantity discounts, which can be either all-unit or incremental discount policies. A mathematical modeling formulation for the proposed problem is presented and a dynamic programming methodology is provided to solve it. Computational experiments are performed in order to examine the accuracy and the performance of the proposed method in terms of running time. The preliminary results indicate that the proposed algorithm is capable of providing optimal solutions within low computational times, high accuracy solutions.