Recent Developments in Supplier Selection and Order Allocation Process

Abstract

Because the purchasing department can play a key role in cost reduction, supplier selection and order allocation are the most important functions of purchasing management. In view of its complexity, it will be focused especially on the final selection stage that consists of determining the best mixture of suppliers and allocating orders among them so as to satisfy different purchasing requirements. In recent years, many researchers used new integrated models for supplier selection and order allocation. They combine multi-criteria approaches such as AHP/ANP and linear programming (LP), mixed integer programming (MIP), non-linear programming (NLP), mixed integer non-linear programming (MINLP) and goal programming (GP) with different achievement scalarizing functions. In this chapter, after the stages of supplier selection process are explained, these new integrated models are introduced and their constraints, variables, and goals/objectives of these models are explained in detail. Then the solution methods of these integrated models are given. Finally, different integrated models are compared by considering their advantages and disadvantages.