Spreadsheet modelling for solving combinatorial problems: The vendor selection problem

Abstract

Spreadsheets have grown up and became very powerful and easy to use tools in applying analytical techniques for solving business problems. Operations managers, production managers, planners and schedulers can work with them in developing solid and practical Do-It-Yourself Decision Support Systems. Small and Medium size organizations, can apply OR methodologies without the presence of specialized software and trained personnel, which in many cases cannot afford anyway. This paper examines an efficient approach in solving combinatorial programming problems with the use of spreadsheets. A practical application, which demonstrates the approach, concerns the development of a spreadsheet-based DSS for the Multi Item Procurement Problem with Fixed Vendor Cost. The DSS has been build using exclusively standard spreadsheet feature and can solve real problems of substantial size. The benefits and limitations of the approach are also discussed.