Decision Sciences Journal
Volume 30, Number 1
Winter 1999
Vendor Selection with Bundling: A Comment
Joseph Sarkis
Graduate School of Management, Clark University, 950 Main Street,
Worcester, MA 01610-1477, email: jsarkis@clarku.edu
John H. Semple
Department of Management Information Sciences, Edwin L. Cox School
of Business, Southern Methodist University, PO Box 750333, Dallas,
TX 75275-0333, email: jsemple@mail.cox.smu.edu
ABSTRACT. 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.
Subject Areas: Integer Programming and Production/Operations
Management. |