Simultaneous component and tolerance allocation through suppliers' selection considering technological capability and production capacity to minimise purchasing cost and quality loss

Abstract

In this paper we investigate component and tolerance allocation through supplier selection model. The model contributes to the current literature by incorporating simultaneous allocation of component and tolerance policy which has not been considered in almost all of previous models. The objective of the model is to minimise purchasing cost and quality loss considering supplier’s technological capability and production capacity. Numerical example is provided to show the implementation of the model and sensitivity analysis is performed to explore the effect of key parameters on selected suppliers, amount of allocation and total cost. The results of sensitivity analysis indicate that the changes on technological capability and production capacity will affect the optimisation result in which the model will tend to select the suppliers which have the lower price comparing to the selected suppliers in numerical example.