A multiproduct economic order quantity model with simulated annealing application

Abstract

Purpose This paper aims to present a set of five models for the economic order quantity problem. Four models solve problems for a single product: incremental discounts with or without backorders and all-unit discounts with or without backorders, and the last model solves problems for the multiproduct case. Design/methodology/approach A basic integer non-linear model with binary variables is presented, and its flexible structure allows for all five models to be utilised with minor modifications for adaptation to individual situations. The multiproduct model takes into consideration the work of Chopra and Meindl (2012), who studied two types of product aggregations: full and adaptive. To find optimal or near-optimal solutions for the multiproduct case, the authors propose a simulated annealing metaheuristic application. Numerical examples are presented to improve the comprehension of each model, and the authors also present the efficiency of the simulated annealing algorithm through an example that aggregates 50 products, each one with different discount schemes and some allowing backorders. Findings Our model proved to be efficient at finding optimal or near optimal solutions even when confronted with mathematical complexities such as the allowance of backorders and incremental discounts. Originality/value Finally our model can process a mix of products with different discount schemes at the same time, and the simulated annealing metaheuristics could find optimal or near optimal solutions with very few iterations.

Economic measuring of losses derived from inventory management at an oil refinery

“…The EOQ aims to minimize the cost of production by determining the ideal lot size with a simple equation. Recent studies are still developed with the concepts of EOQ and with mathematical formulation involving nonlinear equations and more complex computer systems (Pereira and Gomes Costa, 2017;Sebatjane and Adetunji, 2019).…”

ECMS 2019 Proceedings edited by Mauro Iacono, Francesco Palmieri, Marco Gribaudo, Massimo Ficco

“…Purchasing process basically involves with inventory management in determining when and how many materials to purchase. Efficiency purchasing process normally order with the amount that minimize or balance between costs of inventory and purchasing (Jiao, et al 2017;Pereira and Costa 2017;Rezaeisaray, et al 2016). To determine the purchasing process, the problems related to purchasing must be clarified.…”

“…When ordering from a single supplier, the company either determine to order each item separately or jointly order multiple items at the same time. The EOQ model is widely used to calculate the quantity of purchased material when ordering independently (Pereira and Costa 2015;Pereira and Costa 2017). The issue with independently order from the same supplier is that it might not ensure minimum total cost.…”

“…The effective procurement including the processes of sourcing and purchasing all together are essential to the supply chain ). An effective supply chain can reduce supply chain cost by choosing the right supplier, an activity in sourcing process, and purchasing material with the right amount (Araz and Ozkarahan 2007;Pereira and Costa 2017). However, the procurement process in researches is normally discussed in the area of sourcing or purchasing process separately.…”

Impact of Logistic Processes on Economic Order Quantity with Quantity Discount: An Optimization Approach

“…There are, of course, many possible answers to this question, some possible models and approaches are discussed in Table 1. [4]    Sremac et al [5]   Nobil et al [6]   Tripathi [7]    Battini et al [8]     Wang et al [9]     Godicaud et al [10]    Pereira et al [11]     Rezaei [12]  Zhou et al [13]   Shekarian et al [14]     Widyadana et al [15]    Combes [16]    Taleizadeh et al [17]   Taleizadeh et al [18]   Nia et al [19]       Taleizadeh et al [20]   Cardenas et al [21]      Kazemi et al [22]   San-Jose [23]   Samal [24]    …”