Supplier selection by testing the process incapability index

Abstract

In the competitive global business environment of the 21st century, enterprises must respond effectively to customer demands. The selection of suppliers and the evaluation of their performance are becoming major challenges that face manufacturing managers. Assessing a group of suppliers and selecting one or more of them is a complex task because various criteria must be considered in the decision making process. Quality is an essential factor in qualifying a corporation to enter the marketplace. In fact, the quality of parts obtained from suppliers determines the quality of the finished product. Hence, quality is the fundamental factor for supplier evaluation among various criteria. This study applies the process incapability index C_pp to develop an evaluation model that assesses the quality performance of suppliers. The model simplifies the evaluation of suppliers, facilitates their effective selection, and provides insights into the process situation of suppliers who may enter into a long-term partnership with a company.

Keywords:

• Process incapability index
• Supplier selection
• F _max testing hypothesis
• Simultaneous confidence intervals