Supplier selection considering strategic and operational risks: a combined qualitative and quantitative approach

Abstract

This paper proposes a combined qualitative and quantitative approach for supplier selection problem. Multi-component product is considered in which various suppliers could provide each required part. A multi-objective mathematical model is developed to decide about the preferred supplier as well as the purchasing quantity of each part from each selected supplier. Strategic and operational risks are taken into account. In order to handle qualitative risk factors analytic network process is used. Two quantitative risk factors including delay and defect are considered. In addition, the quality of the final product is taken into account. To enable the decision maker to make preferred trade-offs between objectives a fuzzy goal programming approach with soft priorities between objectives is applied. The capability and effectiveness of the proposed model is validated through a case study.

Appendix

Equipment part		Supplier 1			Supplier 2			Supplier 3
		1	2	3	1	2	3	1	2	3
Suppliers’ delay (day)
1		3	6	2	11	9	8	11	7	9
2		5	4	8	8	10	13	12	14	11
3		6	5	3	9	8	11	16	11	10
Expected number of repairs [E(NR ijk )] (per year)
1		0.55	0.52	0.49	0.52	0.50	0.48	0.49	0.46	0.43
2		0.51	0.48	0.46	0.49	0.46	0.45	0.46	0.43	0.40
3		0.48	0.46	0.43	0.46	0.44	0.43	0.43	0.40	0.38
Mean time to repair (MTTR) (h)
1		5.00	4.75	4.50	4.80	4.56	4.42	4.51	4.20	3.90
2		4.65	4.42	4.19	4.46	4.24	4.11	4.20	3.90	3.63
3		4.40	4.18	3.96	4.22	4.01	3.89	3.97	3.69	3.43
Defect rate (parts per 1000)
1		14	21	11	11	18	9	8	17	4
2		13	26	20	12	10	13	13	18	13
3		17	23	10	8	14	11	9	4	5
Expected values of the repair cost (C ijk ) (Dollar)
1		79	65	53	80	66	57	79	63	50
2		78	64	52	79	64	56	77	61	48
3		78	63	51	78	64	55	76	60	47
Purchasing price ($C_{ijk}^{0}$) (Dollar)
1		115.9	104.3	93.9	127.5	114.7	103.2	139.0	125.1	112.6
2		127.5	114.7	103.2	140.2	126.2	113.6	153.0	137.7	123.9
3		140.2	126.2	113.6	154.2	138.8	124.9	168.2	151.4	136.3