Online Pricing with Discounts by a Location Model
نویسندگان
چکیده
This paper investigates a model for pricing the demand for a set of goods when multiple suppliers operate discount schedules based on total business value. We formulate the buyerss decision problem as a mixed binary integer program (MIP) which is a generalization of the capacitated facility location problem (CFLP) and can be solved using Lagrangean heuristics. We have investigated commercially available MIP-solvers (LINGO, Xpress-MP) to solve small-scale examples. A branch-and-bound procedure using Lagrangean relaxation and subgradient optimization is developed for solving large-scale problems that can arise when suppliersdiscount schedules contain multiple price breaks. Results of computer trials on specially adapted large benchmark instances of the CFLP, con rm that a subgradient algorithm can solve such instances e¢ ciently.
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