Two-stage game-theoretic approach to supplier evaluation, selection and order assignment

Abstract

This study proposes a framework for supplier evaluation, selection, and assignment that incorporates a two-stage game-theoretic approach method. The objective is to provide insights to manufacturers in choosing suitable suppliers for different manufacturing processes. The framework applies to the decision logic of multiple manufacturing processes. In the first stage, a non-cooperative game model is utilized for supplier evaluation and selection. The interactive behaviors between a manufacturer and some supplier candidates are modeled and analyzed so that the supplier evaluation value (SEV) can be obtained using the Nash equilibrium. In the second stage, the supplier evaluation values become the input for the Shepley values calculation of each supplier under a cooperative game model. The Shapley values are utilized to create a set of limited supplier allocation. This paper provides managerial insights to verify the proposed approach on supplier selection and allocation. Thus enables SCM manager to optimize supplier evaluation, selection, and order assignment.