Supplier Selection Considering Flexibility, Order Splitting, and Uncertainty of lead times

Effective replenishment planning and inventory
control are essential for the smooth operation and adaptability
of supply chains. These aspects play a pivotal role in upholding
a company’s competitiveness and triumph in today’s
fiercely competitive markets. Supply chain planners encounter
significant hurdles in choosing the most appropriate suppliers
in diverse scenarios, reducing average inventory levels, and
determining optimal safety lead times. This research tackles
these challenges by examining and evaluating a multi-period
replenishment planning issue within the framework of dynamic
demand and multiple suppliers. The suppliers are pre-selected
and defined by procurement costs, with lead times considered as
independent discrete random variables with known and limited
probability distributions. The goal is to optimize the distribution
of order quantities among these pre-selected suppliers
while minimizing the anticipated total cost. Two strategies and
corresponding linear models are suggested to investigate the
impact of dividing orders between suppliers, order crossover,
and order flexibility. Numerical experiments provide evidence
that concurrently considering splitting and flexibility yields
benefits in terms of cost optimization.