A model for B2B supplier selection

Abstract

A supply chain is a set of geographically dispersed facilities that store and transform products, and that are connected by a transportation network. The main task of supply chain management is to design the supply chain so that a given set of objectives is achieved, for example by deciding the location and capacity of new production plants, or the location of warehouses. Since suppliers also play a key role in performance maximization, it is natural to integrate them in the supply chain as well [8]. For this reason, selection of potential suppliers has become a fundamental component of supply chain management; this is even more true in the globalized market of today. The problem of supplier selection can be easily understood as a multiple-criteria decision making (MCDM) problem: businesses express their preferences with respect to suppliers, which can then be ranked and selected. Doing so, however, does not take into account the temporal evolution of supplier performances, neither can it be easily applied when considering more than one customer. To overcome these problems, we introduce a model for supplier selection that extends the classic MCDM model by introducing feedback, and consider its application in the context of multiple customers by means of linear programming.