Green supplier selection and order allocation with incremental quantity discounts

Abstract

Pricing strategies are critical to attract buyers and motivate them to purchase more. Quantity discounts are pricing incentives used by suppliers and benefit the buyers in the sense that the more the purchased quantity the lower the unit price. This paper uses an incremental quantity discount scheme in a green supplier selection and order allocation context and proposes a multi-period single-product bi-objective optimization model. The developed model attempts to maximize the green value and minimize the total cost of the purchased items from the buyer perspective. The model is converted into a single objective one by adopting a weighted comprehensive criterion method and solved using the branch-and-cut algorithm. The results show the effect of the use of incremental quantity discounts on the optimal ordered quantities.