Using supply chain visibility and cost for supplier selection: a mathematical model

Abstract

Improving supply chain performance is desirable for both practitioners and academics. In this regard, supply chain visibility is a crucial issue and has drawn much attention during recent years. Hence, this study examines the impact of visibility in the supplier selection problem by presenting a multi-objective approach. The global criterion method has been utilized to integrate the triple objectives of visibility maximization, defective or delayed parts minimization and finally cost minimization by assigning equal weights to the mentioned objectives. Meanwhile, minimizing the total number of defective or delayed parts has a significant positive role on supply chain performance and therefore it is considered as an independent objective. Furthermore, supply chain costs are considered more extensively in this study and incorporate the main inventory costs including buyer costs and supplier costs, according to the supply chain visibility. Afterwards, the global criterion method function is minimized under the constraints of budget limitation, fulfilment of entire demand, satisfying the minimum level of demand provided by each supplier and the production capacity of each supplier. Then, a numerical example is provided to illustrate the applicability of the presented multi-objective approach. From the final results it is perceivable that visibility enhancement is a desirable goal for supply chain members, in spite of higher expenditure.

Keywords:

• Supplier selection
• cost management
• visibility
• multi-objective programming

JEL classification:

• C02
• C61
• L60