Supplier Selection Problem with Quantity Discount Based on AHP

Supplier selection is a multi-criteria decision making problem which includes both qualitative and quantitative factors. In order to select the best suppliers, it is necessary to make a trade-off between these tangible and intangible factors some of which may conflict. When business volume discounts exist, this problem becomes more complicated, in these circumstances, buyer should decide about two problems: which suppliers are the best and how much should be purchased from each selected supplier. In this article an integration of analytical hierarchy process and non-linear integer and multi-objective programming under some constraints is applied to determine the best suppliers and to place the optimal order quantities among them. This integration-based multi-criteria decision making methodology takes into account both qualitative and quantitative factors in supplier selection. While the analytical hierarchy process matches item characteristics with supplier characteristics, non-linear integer programming model analytically determines the best suppliers and the optimal order quantities among the determined suppliers. A practical case study illustrates its efficiency and effectiveness.