Developing a Mathematical Model for Order Quantity Optimization by Considering Discount

Abstract

This work is aimed at presenting a mathematical model for determining the optimal order in-extenuating conditions (All Unit Discount, Incremental Discount). The expected results are producing several kinds of multi-supplier and multi-time periods with regards to inventories, demand, suppliers' capacity, storage space, and budget constraints in order. It is desirable to minimize the purchasing costs, storage and ordering while considering the lack of needed materials at specified times. To confirm the efficiency of the proposed model in solving purchase planning problems in real world, it has been applied in Asian Oil Turbo Compressor Design Corporation and received approval from the obtained results and experts’ comments. To solve the designed model, the GAMS software is used. Also, model sensitivity analysis and usable results in management decision making based on the importance of proposed matters (shortage reduction in each period and demand increase effect on final cost) are then presented.