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Sourcing decisions with order allocation under supply disruption risk considering quantitative and qualitative criteria

Author

Listed:
  • Maheswar Singh Mahapatra

    (Indian Institute of Technology Kharagpur
    FLAME University)

  • Pravash Chandra Pradhan

    (Indian Institute of Technology Kharagpur)

  • J. K. Jha

    (Indian Institute of Technology Kharagpur)

Abstract

This paper addresses sourcing decisions with order allocation in the presence of supplier disruption risks in a two-echelon supply chain considering both quantitative and qualitative aspects. A mixed-integer linear program is proposed for the optimal supplier selection and order allocation considering finite and expandable production capacity, failure probability, all-unit price discount, and spot-market cost. Due to the time complexity of the problem to get an optimal solution, we develop a heuristic which is found highly efficient in time complexity and highly competitive in solution quality. A multi-objective model is formulated to capture the qualitative aspect of suppliers by maximizing the total purchase value along with minimizing the expected total cost. We have applied NSGA-II and MOPSO, two widely used evolutionary algorithms, to solve the multi-objective model. A numerical illustration is presented along with sensitivity analysis considering a supplier base of twenty suppliers and a sourcing strategy up to six suppliers. It has been found that dual-sourcing and triple-sourcing are mainly part of the non-dominated Pareto front. Also, increasing demand would lead to a higher level of sourcing strategy, which also depends on the maximum capacity of suppliers and the minimum order to be allocated to the selected suppliers.

Suggested Citation

  • Maheswar Singh Mahapatra & Pravash Chandra Pradhan & J. K. Jha, 2022. "Sourcing decisions with order allocation under supply disruption risk considering quantitative and qualitative criteria," Operational Research, Springer, vol. 22(4), pages 3291-3333, September.
    • Handle: RePEc:spr:operea:v:22:y:2022:i:4:d:10.1007_s12351-021-00661-2
    DOI: 10.1007/s12351-021-00661-2
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    References listed on IDEAS

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