A new optimization approach for supply chain management models with quantity discount consideration

Owing to the difficulty of treating nonlinear functions, in many supply chain management (SCM) models, it has been assumed that the average prices of materials, production, transportation, and inventory are constant. This assumption, however, is not practical. Vendors usually offer quantity discounts to encourage the buyers to order more, and the producer intends to discount the unit production cost if the amount of production is large. In this article, we solves a nonlinear SCM model capable of treating various quantity discount functions simultaneously, including linear, single breakpoint, step, and multiple breakpoint functions. Then, we utilize the presented linearization techniques. So, such a nonlinear model is approximated to a linear mixed 0-1 program solvable to obtain a global optimum.