An integrated decision-making process for sustainable supplier selection and order allocation in the automotive industry

Abstract

A sustainable supplier selection problem can be concisely defined as a classical supplier selection problem that incorporates environmental and social criteria to select and monitor suppliers’ performances, creating the sustainable supplier selection and order allocation (SSS&OA) problem. Finding the optimal order allocation to suppliers in the automotive industry is crucial as it can significantly improve the social, environmental, and economic performance of the whole supply chain. Therefore, this research aims to find an optimal order allocation plan for suppliers using an augmented ε-constraint optimization method in the automotive industry while considering all three dimensions of sustainability. Using a previously established comprehensive framework, this paper has adapted the solution approach of an existing bi-objective order allocation model that was used to make sourcing decisions. The results showed a higher total value of sustainable purchasing is achieved by the augmented ε-constraint optimization method compared to the traditional max-min method.