Dynamic Programming for Supplier Selection and Determining the Order Quantity

In this paper the problem of supplier selection and determining the order quantity assigned to each supplier in a multi-period planning status has been studied simultaneously. Considered supply chain, has been composed from a few supplier companies and a producer company, and the producer is willing to select suppliers and determine the order quantity in each period from eligible suppliers. Each supplier offers a different price and the ordering fixed cost is also different. In each period, producers need to a product is different and known and holding costs are also considered. We have provided a mathematical model and a forward dynamic programming method for optimizing and obtaining an exact result. Finally a numerical example mentioned and computational results have been compared with branch and bound method, indicating much higher performance of the presented algorithm.