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Selecting a supplier portfolio with value, development, and risk consideration

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  • Hosseininasab, Amin
  • Ahmadi, Abbas

Abstract

This paper introduces a novel two-phase supplier selection procedure. Unlike most supplier selection researches, which are decisive based on supplier eligibility at the time of the decision making, the proposed method is based on the long term trend of value, stability, and relationship of potential suppliers. In the first phase, suppliers are evaluated and assigned a comparable value based on a set of criteria. This value is then analyzed in the long run, and fed into a multi-objective portfolio optimization model in the second phase. The model determines a supplier portfolio by maximizing the expected value and development of suppliers, and minimizing their correlated risk. The novelty of this procedure is introducing a new view toward the supplier selection problem. Numerical tests show that the proposed approach selects higher value suppliers with lower risk of failure, compared to available methods.

Suggested Citation

  • Hosseininasab, Amin & Ahmadi, Abbas, 2015. "Selecting a supplier portfolio with value, development, and risk consideration," European Journal of Operational Research, Elsevier, vol. 245(1), pages 146-156.
    • Handle: RePEc:eee:ejores:v:245:y:2015:i:1:p:146-156
    DOI: 10.1016/j.ejor.2015.02.041
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    6. Kerstin Dächert & Ria Grindel & Elisabeth Leoff & Jonas Mahnkopp & Florian Schirra & Jörg Wenzel, 2022. "Multicriteria asset allocation in practice," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 44(2), pages 349-373, June.
    7. Galo, Nadya Regina & Calache, Lucas Daniel Del Rosso & Carpinetti, Luiz Cesar Ribeiro, 2018. "A group decision approach for supplier categorization based on hesitant fuzzy and ELECTRE TRI," International Journal of Production Economics, Elsevier, vol. 202(C), pages 182-196.
    8. Golmohammadi, Amirmohsen & Taghavi, Majid & Farivar, Samira & Azad, Nader, 2018. "Three strategies for engaging a buyer in supplier development efforts," International Journal of Production Economics, Elsevier, vol. 206(C), pages 1-14.
    9. Gu, Jing & Shi, Xinyu & Wang, Peini & Xu, Xun, 2022. "Examining the impact of upstream and downstream relationship stability and concentration on firms’ financial performance," Journal of Business Research, Elsevier, vol. 141(C), pages 229-242.
    10. Quigley, John & Walls, Lesley & Demirel, Güven & MacCarthy, Bart L. & Parsa, Mahdi, 2018. "Supplier quality improvement: The value of information under uncertainty," European Journal of Operational Research, Elsevier, vol. 264(3), pages 932-947.
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