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European Journal of Operational Research 186 (2008) 1059–1067 www.elsevier.com/locate/ejor
An eﬃcient and simple model for multiple criteria
supplier selection problem
Wan Lung Ng
Department of Management Sciences, City University of Hong Kong, 83 Tat Chee Avenue, Kowloon Tong, Hong Kong Received 16 December 2005; accepted 8 January 2007
Available online 20 February 2007
Simply looking for vendors oﬀering the lowest prices is not ‘‘eﬃcient sourcing’’ any more. Selection of suppliers is a multiple criteria decision. We propose a weighted linear program for the multi-criteria supplier selection problem. In addition to mathematical formulation, this paper studies a transformation technique which enables our proposed model to be solved without an optimizer. The model for multi-criteria supplier selection problem can be easily implemented with a spreadsheet package. The model can be widely applied to practical situations and does not require the user with any optimization background. Ó 2007 Elsevier B.V. All rights reserved.
Keywords: Purchasing; Multiple criteria analysis; Supplier selection; Vendor selection
Competitive advantages associated with supply chain management (SCM) philosophy can be achieved by strategic collaboration with suppliers and service providers. The success of a supply chain is highly dependent on selection of good suppliers. Simply looking for vendors oﬀering the lowest prices is not ‘‘eﬃcient sourcing’’ any more. Multiple criteria need to be taken into account when selecting suppliers. The supplier selection problem has received considerable attention in academic research and literature. Early in 1960s, Dickson identiﬁed 23 criteria that ought to be considered by purchasing personnel in evaluating suppliers . A latter review by Weber et al.  reported that well over half of 74 research papers reviewed addressed the supplier selection problem with multiple criteria. Another comprehensive review by De Boer et al.  discussed a framework for supplier selection. The framework covers diﬀerent phases of the supplier selection process, including pre-qualiﬁcation, formulation of criteria, ﬁnal evaluation, etc. In the ﬁnal evaluation phase of suppliers, after pre-qualiﬁcation, quantitative models incorporating multi-criteria were constructed. These models
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W.L. Ng / European Journal of Operational Research 186 (2008) 1059–1067
are based on multi-objective optimization (MOP) [3,12,13], data envelopment analysis (DEA) [7,9,10,12,13], analytic hierarchical process (AHP) [1,2,6] and simple multi-attribute rating technique (SMART) . These models provide systematic approaches for purchasing managers to evaluate and score suppliers with multi-criteria. Nevertheless, these models are not easy to implement. Models based on multi-objective optimization require the decision makers to exogenously specify the exact values of weights of individual criteria. It is however diﬃcult to obtain precise weight values. The weight determination is a challenging task for implementing the MOP approach. A similar problem is faced when decision makers choose the SMART approach. On the other hand, to assist decision makers in determination of the weights, the AHP approach provides for interactive comparisons for users to obtain the weights. Decision makers are required to perform pair-wise comparisons between the criteria and the supplier alternatives under a particular criterion. However, the results are highly dependent on the subjective judgments of the decision makers. Decision makers have to specify not only the direction of relative importance (e.g., Criterion A is more important than Criterion B) but also the degree of the...
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