Note. An Acquisition Policy for a Single Item Multi-Supplier System

Abstract

In this paper we consider the problem of developing an acquisition policy. Specifically, given a set of potential (qualified) suppliers, from whom should the firm buy the product, in what quantities, and how often? We provide properties of the optimal solution and relate them to the approach of using a single source as advocated by JIT. The solution procedure provides the periodic order quantity from each supplier; the order size; and the firm cycle time as well as how many times per cycle we should order from each supplier. We show that the maximum error of our solution can be made as small as desired.