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Application of Integer Linear Programing

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Application of Integer Linear Programing
Proceedings of the 2010 International Conference on Industrial Engineering and Operations Management
Dhaka, Bangladesh, January 9 – 10, 2010

Application of Integer Linear Programming Model for Vendor
Selection in a Two Stage Supply Chain
A. John Rajan
Department of Mechanical and Production Engineering
Sathyabama University, Chennai, India
K. Ganesh
Senior consultant, Global Business Services, IBM India Private Limited, Mumbai, India
K.V. Narayanan
Controller of Examinations, Sathyabama University, Chennai, India
Abstract
Contemporary organizations rely on outsourcing for success in today’s competitive marketplace, and selecting a vendor is an important process as developing new products. Vendor selection is one of the most important decisions of purchasing function. As organizations become more dependent on vendors, the direct and the indirect consequences of poor decision-making become more severe. Literature shows many vendor evaluation models. In this paper we have proposed a vendor selection model using Integer Linear Programming (ILP) Model for multiproduct, multi-vendor environment. The contribution of this research lies in the implementation of this model as a customized decision support system according to the expectation of any company. The model is validated with a case study by implementing the model for Agricultural equipments whole sale company.

Key words
Vendor selection, Integer Linear Programming (ILP) Model, Supply chain, Vendor Assignment.

1. Introduction:
ILP is a linear programming model in which there a particular function to be maximized is or minimized subject to several constraints. As the unknown variables are all required to be integers, then the problem is called an integer programming (IP) or integer linear programming (ILP) problem. 0-1 integer programming or binary integer programming (BIP) is the special case of integer programming where variables are required to be 0 or 1 (rather than
arbitrary
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