Decision Sciences Journal
Volume 27, Number 4
Fall 1996
A Heuristic Algorithm for the Capacitated Multiple Supplier
Inventory Grouping Problem
Siddhartha S. Syam
Department of Management, College of Business Administration,
Marquette University, Milwaukee, WI 53201-1881
Bala Shetty
Department of Business Analysis and Research, Texas A&M University,
College Station, TX 77843
ABSTRACT
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.
Subject Areas: Mathematical Programming,
Production/Operations Management, and Quantitative
Techniques/Methodology.
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