Development and assessment of modified VIKOR method for multi-criteria single sourcing in supply chain

Abstract

The sourcing decision plays a major role in supply chain because raw materials/semi-finished goods cost constitute the key cost of final product. We develop a modified VlseKriterijumska Optimizacija I Kompromisno Resenje (VIKOR) method, a compromise ranking model for evaluation and selection of sourcing partners to handle the conflicting and non-commensurable set of criteria and to identify the solution close to ideal. The modified VIKOR method is compared with two multi-criteria decision-making methods: technique for order preference by similarity to an ideal solution (TOPSIS) and elimination and choice translating reality (ELECTRE). All the three approaches were illustrated and compared for a computer retail supply chain case study. The better results of modified VIKOR are validated.