SUNConferences, Computers and Industrial Engineering 42

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Long-Term Sourcing Model For Multi-Objective Supplier Selection Under Uncertainty
Gursel Suer, Jing Huang

Last modified: 2012-06-25

Abstract


A supplier selection problem under uncertainty is a multi-criteria decision making process involving varying item demand and suppliers’ performances. This paper proposes a long-term sourcing framework to capture supplier dynamics with multiple objectives such as minimizing cost, improving quality and service level. In the proposed framework, an optimization model makes the purchasing decisions for each single period, and a simulation model continuously updates individual supplier’s performances according to historical purchasing decisions. We first introduce the fuzzy multi-objective programming to solve for the single-period optimization problem with objectives of minimizing weighted total costs, weighted average defect rate and weighted average late delivery rate. Later, we develop a simulation model, where individual suppliers’ performances are continuously updated based on previous contracts. The proposed long-term sourcing framework is experimented with data obtained from a real-world jewelry supply chain. The purchasing decisions for each period are presented, and the impact of the simulation strategy for updating supplier profile is also discussed in detail. The results indicate that the proposed framework is capable of simulating market change and adapting purchasing decisions based on the change of individual supplier’s performances.


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