Procurement optimization from multiple suppliers with periodic and total order constraints under stochastic and non-stationary demands

Multi-supplier and multi-period order allocation with periodic and total order constrtaints is addressed. A stochastic nonlinear programming model is developed to minimize the expectation value of the difference between the sum of procurement,inventory and shortage cost and the residual value of the ending inventory for the purchaser over the planning horizon. The optimal procurement policy in single period is obtained according to the newsboy model after the order constraints and multiple suppliers are considered. Then the heuristic policy for multi-period procurement is derived from the optimal one in single period. An illustrative example is presented,and simulation results show the effects of several parameters on the optimal policy and the corresponding minimum cost. The total minimum commitment contract is extended to the non-stationary demands and multiple suppliers setting,which can reduce costs for the purchaser.