COORDINATED REPLENISHMENTS FROM MULTIPLE SUPPLIERS WITH PRICE DISCOUNTS

In this study we present an integer programming model for determining an optimal inbound consolidation strategy for a purchasing manager who receives items from several suppliers. The model considers multiple s uppliers with limited capacity, transportation economies, and quantity discounts. We propose an integrated branch and bound procedure for so lving the model. This procedure, applied to a Lagrangean dual at every node of the search tree, combines the subgradient method with a prima l heuristic that interact to change the Lagrangean multipliers and tig hten the upper and lower bounds. An enhancement to the branch and boun d procedure is de;eloped using surrogate constraints, which is found t o be beneficial for solving large problems. We report computational re sults for a variety of problems, with as many as 70,200 variables and 3665 constraints. Computational testing indicates that our procedure i s significantly faster than the general purpose integer programming co de OSL. A regression analysis is performed to determine the most signi ficant parameters of our model. (C) 1998 John Wiley & Sons, Inc.