Supplier Selection and Order Allocation in Supply Chain

Abstract

Today, there are growing challenges on business environment because of increase in competition and customer expectations .selection of supplier and later order allocation is an essential subject matter in the area of supply chains. An well-ordered and flexible supply chain allows the firm to choose the correct suppliers at the right time for the right kind of materials, with reduced purchase cost, thereby improving competitiveness.Supply chains have the basic characteristics like multiple conflicting criteria, demand uncertainties, lead time and delivery uncertainties. In the literature isolated studies on supplier selection using mathematical models, multiple criteria decision making techniques and multiple stakeholder requirements are commonly found. Integration of these aspects give promising results. The correlated Analytic Hierarchy (CAHP) considers the correlation effect between criteria in the Analytic Hierarchy process. Linear physical programming (LPP) is a multi-objective optimization method that develops an aggregate objective function of the criteria in a piecewise, goal-programming fashion. LPP model enables decision maker to think about multiple criteria (i.e., cost, customer service, and rejections) and to express criteria preferences in terms of degrees of desirability. This paper proposes an integrated method for dealing with such problems using correlated Analytic Hierarchy– and linear physical programming techniques. The method proposed demonstrates selection of appropriate suppliers and allocates orders optimally among them .finally model calculation is presented.