An optimization technique for vendor selection with quantity discounts using Genetic Algorithm

Vendor selection decisions are complicated by the fact that various conflicting multi-objective factors must be considered in the decision making process. The problem of vendor selection becomes still more complicated with the inclusion of incremental discount pricing schedule. Such hard combinatorial problems when solved using meta heuristics produce near optimal solutions. This paper proposes a multi-component multiple vendor selection model with vendors offering quantity discounts. This problem is then evaluated using Genetic Algorithm with a case study approach. Combinatorial approach is used to group the vendors for selection and Genetic Algorithm to allocate the optimal order quantities for each vendor.