OPTIMAL SUPPLY CONTRACT DESIGN WITH MULTIPLE SUPPLIERS UNDER SUPPLY AND DEMAND RISKS
Atilla Yalçın, Christian Wolf
We consider a decision problem where a buyer has to decide how to design supply contracts with multiple suppliers. Each supply contract with a supplier consists of a fixed and flexible volume agreement which incurs different costs. The fixed part of the supply contract is linear pricing scheme with discounts whereas the flexible part is a supply option agreement. The buyer can choose to implement a single sourcing strategy or to run a multiple sourcing strategy with different supplier flexibilities. This is especially important in cases where supply and demand risks exist. We provide a stochastic linear programming model formulation and show how it can be implemented by Flop C++. Furthermore we give some numerical illustrations.
Lecture Notes in Management Science (2011) Vol. 3: 365-376
3rd International Conference on Applied Operational Research, Proceedings
© Tadbir Operational Research Group Ltd. All rights reserved.
ISSN 2008-0050 (Print)
ISSN 1927-0097 (Online)
· Literature Review
· Model Formulation
· Numerical Illustration
· Scenario Definition
· Numerical Results