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A robust optimisation approach to the problem of supplier selection and allocation in outsourcing

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  • Yelin Fu
  • Kin Keung Lai
  • Liang Liang

Abstract

We formulate the supplier selection and allocation problem in outsourcing under an uncertain environment as a stochastic programming problem. Both the decision-maker's attitude towards risk and the penalty parameters for demand deviation are considered in the objective function. A service level agreement, upper bound for each selected supplier's allocation and the number of selected suppliers are considered as constraints. A novel robust optimisation approach is employed to solve this problem under different economic situations. Illustrative examples are presented with managerial implications highlighted to support decision-making.

Suggested Citation

  • Yelin Fu & Kin Keung Lai & Liang Liang, 2016. "A robust optimisation approach to the problem of supplier selection and allocation in outsourcing," International Journal of Systems Science, Taylor & Francis Journals, vol. 47(4), pages 913-918, March.
    • Handle: RePEc:taf:tsysxx:v:47:y:2016:i:4:p:913-918
    DOI: 10.1080/00207721.2014.907970
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    References listed on IDEAS

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    Cited by:

    1. Ji, Ling & Huang, Guo-He & Huang, Lu-Cheng & Xie, Yu-Lei & Niu, Dong-Xiao, 2016. "Inexact stochastic risk-aversion optimal day-ahead dispatch model for electricity system management with wind power under uncertainty," Energy, Elsevier, vol. 109(C), pages 920-932.
    2. Gallice, Andrea, 2017. "An approximate solution to rent-seeking contests with private information," European Journal of Operational Research, Elsevier, vol. 256(2), pages 673-684.

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