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Supplier selection with multiple criteria in volume discount environments

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  • Xia, Weijun
  • Wu, Zhiming
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    Abstract

    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 as, 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 integrated approach of analytical hierarchy process improved by rough sets theory and multi-objective mixed integer programming is proposed to simultaneously determine the number of suppliers to employ and the order quantity allocated to these suppliers in the case of multiple sourcing, multiple products, with multiple criteria and with supplier's capacity constraints. In this context, suppliers offer price discounts on total business volume, not on the quantity or variety of products purchased from them. A solution methodology is presented to solve the multi-objective model, and the model is illustrated using two numerical examples.

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    Bibliographic Info

    Article provided by Elsevier in its journal Omega.

    Volume (Year): 35 (2007)
    Issue (Month): 5 (October)
    Pages: 494-504

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    Handle: RePEc:eee:jomega:v:35:y:2007:i:5:p:494-504

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    Keywords: Supplier selection AHP Volume discount Rough sets Multi-criteria Multi-objective;

    References

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    1. Weber, Charles A. & Current, John R., 1993. "A multiobjective approach to vendor selection," European Journal of Operational Research, Elsevier, vol. 68(2), pages 173-184, July.
    2. Chaudhry, Sohail S. & Forst, Frank G. & Zydiak, James L., 1993. "Vendor selection with price breaks," European Journal of Operational Research, Elsevier, vol. 70(1), pages 52-66, October.
    3. Ghodsypour, S. H. & O'Brien, C., 2001. "The total cost of logistics in supplier selection, under conditions of multiple sourcing, multiple criteria and capacity constraint," International Journal of Production Economics, Elsevier, vol. 73(1), pages 15-27, August.
    4. Weber, Charles A. & Current, John R. & Benton, W. C., 1991. "Vendor selection criteria and methods," European Journal of Operational Research, Elsevier, vol. 50(1), pages 2-18, January.
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    Citations

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    Cited by:
    1. Wang, John & Yan, Ruiliang & Hollister, Kimberly & Zhu, Dan, 2008. "A historic review of management science research in China," Omega, Elsevier, vol. 36(6), pages 919-932, December.
    2. Jain, Vipul & Panchal, Gajanan B. & Kumar, Sameer, 2014. "Universal supplier selection via multi-dimensional auction mechanisms for two-way competition in oligopoly market of supply chain," Omega, Elsevier, vol. 47(C), pages 127-137.
    3. Chen, Chien-Ming, 2009. "A fuzzy-based decision-support model for rebuy procurement," International Journal of Production Economics, Elsevier, vol. 122(2), pages 714-724, December.
    4. Gunasekaran, Angappa & Lai, Kee-hung & Edwin Cheng, T.C., 2008. "Responsive supply chain: A competitive strategy in a networked economy," Omega, Elsevier, vol. 36(4), pages 549-564, August.
    5. Konur, Dinçer & Toptal, Ayşegül, 2012. "Analysis and applications of replenishment problems under stepwise transportation costs and generalized wholesale prices," International Journal of Production Economics, Elsevier, vol. 140(1), pages 521-529.
    6. Jadidi, O. & Zolfaghari, S. & Cavalieri, S., 2014. "A new normalized goal programming model for multi-objective problems: A case of supplier selection and order allocation," International Journal of Production Economics, Elsevier, vol. 148(C), pages 158-165.
    7. Lin, Rong-Ho, 2012. "An integrated model for supplier selection under a fuzzy situation," International Journal of Production Economics, Elsevier, vol. 138(1), pages 55-61.
    8. Chen, Lisa Y. & Wang, Tien-Chin, 2009. "Optimizing partners' choice in IS/IT outsourcing projects: The strategic decision of fuzzy VIKOR," International Journal of Production Economics, Elsevier, vol. 120(1), pages 233-242, July.
    9. Wenstøp, Fred & Koppang, Haavard, 2009. "On operations research and value conflicts," Omega, Elsevier, vol. 37(6), pages 1109-1120, December.
    10. Sawik, Tadeusz, 2011. "Selection of supply portfolio under disruption risks," Omega, Elsevier, vol. 39(2), pages 194-208, April.
    11. García Alcaraz Jorge Luis & Alvarado Iniesta Alejandro & Maldonado Macías Aidé Araceli, 2013. "Selección de proveedores basada en análisis dimensional," Contaduría y Administración:Revista Internacional, Accounting and Management: International Journal, vol. 58(3), pages 249-278, julio-sep.
    12. Eng, Shao Wei Lester & Chew, Ek Peng & Lee, Loo Hay, 2014. "Impacts of supplier knowledge sharing competences and production capacities on radical innovative product sourcing," European Journal of Operational Research, Elsevier, vol. 232(1), pages 41-51.
    13. Wu, Chong & Barnes, David, 2010. "Formulating partner selection criteria for agile supply chains: A Dempster-Shafer belief acceptability optimisation approach," International Journal of Production Economics, Elsevier, vol. 125(2), pages 284-293, June.
    14. Hammami, Ramzi & Temponi, Cecilia & Frein, Yannick, 2014. "A scenario-based stochastic model for supplier selection in global context with multiple buyers, currency fluctuation uncertainties, and price discounts," European Journal of Operational Research, Elsevier, vol. 233(1), pages 159-170.
    15. Guo, Cong & Li, Xueping, 2014. "A multi-echelon inventory system with supplier selection and order allocation under stochastic demand," International Journal of Production Economics, Elsevier, vol. 151(C), pages 37-47.
    16. Cheng-Yuan Ku & Ching-Ter Chang & Hui-Ping Ho, 2010. "Global supplier selection using fuzzy analytic hierarchy process and fuzzy goal programming," Quality & Quantity: International Journal of Methodology, Springer, vol. 44(4), pages 623-640, June.
    17. Sawik, Tadeusz, 2010. "Single vs. multiple objective supplier selection in a make to order environment," Omega, Elsevier, vol. 38(3-4), pages 203-212, June.

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