Supplier selection in closed loop supply chain by an integrated simulation-Taguchi-DEA approach

Abstract

Purpose – Reverse logistics refer to processes related to the reuse of products. The role of suppliers’ performance is crucial in achieving quality, cost, service and delivery aims of a supply chain. The selection of suppliers is regarded as one of the critical issues encountered by purchasing and operations managers in a supply chain to enhance organization’s global marketplace competitiveness. Most of the supply chain models are rather complex problems. Consequently, it is impossible to propose systematic models to handle them. Therefore, in this paper a new integrated approach based on experimental design and computer simulation is proposed for supplier selection. The paper aims to discuss these issues. Design/methodology/approach – In this study, a simulation approach is implemented to determine certain equivalent of parameters values in a CLSC network design which cannot be computed through mathematical model. Suppliers’ order quantities are investigated by Taguchi method for planning time horizon. Moreover, data envelopment analysis (DEA) is applied to assess suppliers based on quality, cost, delivery time, production capabilities, services and technology. Findings – In the numerical example, there are three suppliers for different regions. Purchase value of each supplier is measured in three years successively. According to the proposed method, the authors find the minimum level of costs together with the maximum number of high-quality products. Practical implications – The objective functions of model are minimizing the costs and maximizing number of high-quality products. The integrated approach introduced in this paper enables managers to select their suppliers effectively in their real system. Originality/value – Most supply chain models are complex and the identification of proper and optimal solutions in complex real-world systems often requires the solution of multi-objective problems involving multiple stochastic variables. Therefore, the paper introduces a new integrated approach for supplier selection in closed loop supply chain. To the best of the authors knowledge, this is the first study that integrates DEA, computer simulation and Taguchi method for supplier selection in closed loop supply chains.