Multisourcing suppliers selection in service outsourcing

Abstract

Multisourcing suppliers selection in service outsourcing involves selecting a supplier portfolio with a reasonable number of suppliers and better performance to cover aspiration levels of criteria. It is a specific weighted matching problem with new challenges. This paper proposes a decision method for solving this problem. In the proposed method, different formats of preference information, including numerical values, interval numbers and linguistic variables, are used to express alternative ratings. The technique for order preference by similarity to ideal solution is extended to aggregate the three formats of preference information. A bi-objective 0–1 linear programming model using the aggregated information is built to select a desired supplier portfolio, in which the objectives of minimization of suppliers number and maximization of supplier performance are involved. To solve this model, we transform it into an equivalent, and then an exact multi-objective branch-and-bound algorithm is developed to obtain Pareto-optimal solutions. In addition, a real case of an insurance company is used to illustrate the applicability of the proposed method.

Keywords:

• decision analysis
• outsourcing
• different formats of preference information
• bi-objective 0–1 programming

Acknowledgements

This work was partly supported by the National Nature Science Foundation of China (Project Nos. 70901027 and 71090403/ 71090400), Philosophy and Social Science Funds of Guangdong Province (Project No. 090–05) and Fundamental Research Funds for the Central Universities, SCUT (Project No. 2011SG001).