IDEAS home Printed from https://ideas.repec.org/a/eee/ejores/v245y2015i1p146-156.html
   My bibliography  Save this article

Selecting a supplier portfolio with value, development, and risk consideration

Author

Listed:
  • Hosseininasab, Amin
  • Ahmadi, Abbas

Abstract

This paper introduces a novel two-phase supplier selection procedure. Unlike most supplier selection researches, which are decisive based on supplier eligibility at the time of the decision making, the proposed method is based on the long term trend of value, stability, and relationship of potential suppliers. In the first phase, suppliers are evaluated and assigned a comparable value based on a set of criteria. This value is then analyzed in the long run, and fed into a multi-objective portfolio optimization model in the second phase. The model determines a supplier portfolio by maximizing the expected value and development of suppliers, and minimizing their correlated risk. The novelty of this procedure is introducing a new view toward the supplier selection problem. Numerical tests show that the proposed approach selects higher value suppliers with lower risk of failure, compared to available methods.

Suggested Citation

  • Hosseininasab, Amin & Ahmadi, Abbas, 2015. "Selecting a supplier portfolio with value, development, and risk consideration," European Journal of Operational Research, Elsevier, vol. 245(1), pages 146-156.
    • Handle: RePEc:eee:ejores:v:245:y:2015:i:1:p:146-156
    DOI: 10.1016/j.ejor.2015.02.041
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0377221715001617
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ejor.2015.02.041?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Liao, Zhiying & Rittscher, Jens, 2007. "A multi-objective supplier selection model under stochastic demand conditions," International Journal of Production Economics, Elsevier, vol. 105(1), pages 150-159, January.
    2. Amid, A. & Ghodsypour, S.H. & O'Brien, C., 2006. "Fuzzy multiobjective linear model for supplier selection in a supply chain," International Journal of Production Economics, Elsevier, vol. 104(2), pages 394-407, December.
    3. Sawik, Tadeusz, 2013. "Selection of resilient supply portfolio under disruption risks," Omega, Elsevier, vol. 41(2), pages 259-269.
    4. Jadidi, O. & Zolfaghari, S. & Cavalieri, S., 2014. "A new normalized goal programming model for multi-objective problems: A case of supplier selection and order allocation," International Journal of Production Economics, Elsevier, vol. 148(C), pages 158-165.
    5. Sawik, Tadeusz, 2010. "Single vs. multiple objective supplier selection in a make to order environment," Omega, Elsevier, vol. 38(3-4), pages 203-212, June.
    6. Hancock, G.D., 2005. "A text book treatment of calculating returns on non-traditional portfolios," Review of Financial Economics, Elsevier, vol. 14(2), pages 173-186.
    7. Talluri, Srinivas & Narasimhan, Ram & Chung, Wenming, 2010. "Manufacturer cooperation in supplier development under risk," European Journal of Operational Research, Elsevier, vol. 207(1), pages 165-173, November.
    8. Remer, Donald S. & Nieto, Armando P., 1995. "A compendium and comparison of 25 project evaluation techniques. Part 2: Ratio, payback, and accounting methods," International Journal of Production Economics, Elsevier, vol. 42(2), pages 101-129, December.
    9. Chen, Chen-Tung & Lin, Ching-Torng & Huang, Sue-Fn, 2006. "A fuzzy approach for supplier evaluation and selection in supply chain management," International Journal of Production Economics, Elsevier, vol. 102(2), pages 289-301, August.
    10. Rezaei, Jafar & Ortt, Roland, 2013. "Multi-criteria supplier segmentation using a fuzzy preference relations based AHP," European Journal of Operational Research, Elsevier, vol. 225(1), pages 75-84.
    11. Remer, Donald S. & Nieto, Armando P., 1995. "A compendium and comparison of 25 project evaluation techniques. Part 1: Net present value and rate of return methods," International Journal of Production Economics, Elsevier, vol. 42(1), pages 79-96, November.
    12. Faez, F. & Ghodsypour, S.H. & O'Brien, C., 2009. "Vendor selection and order allocation using an integrated fuzzy case-based reasoning and mathematical programming model," International Journal of Production Economics, Elsevier, vol. 121(2), pages 395-408, October.
    13. Wagner, Stephan M. & Boutellier, Roman, 2002. "Capabilities for managing a portfolio of supplier relationships," Business Horizons, Elsevier, vol. 45(6), pages 79-88.
    14. Sawik, Tadeusz, 2011. "Selection of supply portfolio under disruption risks," Omega, Elsevier, vol. 39(2), pages 194-208, April.
    15. Ho, William & Xu, Xiaowei & Dey, Prasanta K., 2010. "Multi-criteria decision making approaches for supplier evaluation and selection: A literature review," European Journal of Operational Research, Elsevier, vol. 202(1), pages 16-24, April.
    16. Mafakheri, Fereshteh & Breton, Michele & Ghoniem, Ahmed, 2011. "Supplier selection-order allocation: A two-stage multiple criteria dynamic programming approach," International Journal of Production Economics, Elsevier, vol. 132(1), pages 52-57, July.
    17. MacLean, Leonard C. & Foster, Michael E. & Ziemba, William T., 2007. "Covariance complexity and rates of return on assets," Journal of Banking & Finance, Elsevier, vol. 31(11), pages 3503-3523, November.
    18. Awasthi, A. & Chauhan, S.S. & Goyal, S.K. & Proth, Jean-Marie, 2009. "Supplier selection problem for a single manufacturing unit under stochastic demand," International Journal of Production Economics, Elsevier, vol. 117(1), pages 229-233, January.
    19. Wu, Desheng Dash & Zhang, Yidong & Wu, Dexiang & Olson, David L., 2010. "Fuzzy multi-objective programming for supplier selection and risk modeling: A possibility approach," European Journal of Operational Research, Elsevier, vol. 200(3), pages 774-787, February.
    20. Awi Federgruen & Nan Yang, 2008. "Selecting a Portfolio of Suppliers Under Demand and Supply Risks," Operations Research, INFORMS, vol. 56(4), pages 916-936, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Samuel Yousefi & Mustafa Jahangoshai Rezaee & Maghsud Solimanpur, 2021. "Supplier selection and order allocation using two-stage hybrid supply chain model and game-based order price," Operational Research, Springer, vol. 21(1), pages 553-588, March.
    2. Kellner, Florian & Lienland, Bernhard & Utz, Sebastian, 2019. "An a posteriori decision support methodology for solving the multi-criteria supplier selection problem," European Journal of Operational Research, Elsevier, vol. 272(2), pages 505-522.
    3. Mohammadivojdan, Roshanak & Merzifonluoglu, Yasemin & Geunes, Joseph, 2022. "Procurement portfolio planning for a newsvendor with supplier delivery uncertainty," European Journal of Operational Research, Elsevier, vol. 297(3), pages 917-929.
    4. Alikhani, Reza & Torabi, S. Ali & Altay, Nezih, 2019. "Strategic supplier selection under sustainability and risk criteria," International Journal of Production Economics, Elsevier, vol. 208(C), pages 69-82.
    5. Visani, Franco & Boccali, Filippo, 2020. "Purchasing price assessment of leverage items: A Data Envelopment Analysis approach," International Journal of Production Economics, Elsevier, vol. 223(C).
    6. Kerstin Dächert & Ria Grindel & Elisabeth Leoff & Jonas Mahnkopp & Florian Schirra & Jörg Wenzel, 2022. "Multicriteria asset allocation in practice," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 44(2), pages 349-373, June.
    7. Galo, Nadya Regina & Calache, Lucas Daniel Del Rosso & Carpinetti, Luiz Cesar Ribeiro, 2018. "A group decision approach for supplier categorization based on hesitant fuzzy and ELECTRE TRI," International Journal of Production Economics, Elsevier, vol. 202(C), pages 182-196.
    8. Golmohammadi, Amirmohsen & Taghavi, Majid & Farivar, Samira & Azad, Nader, 2018. "Three strategies for engaging a buyer in supplier development efforts," International Journal of Production Economics, Elsevier, vol. 206(C), pages 1-14.
    9. Gu, Jing & Shi, Xinyu & Wang, Peini & Xu, Xun, 2022. "Examining the impact of upstream and downstream relationship stability and concentration on firms’ financial performance," Journal of Business Research, Elsevier, vol. 141(C), pages 229-242.
    10. Zheng, Deyuan & Song, Hang & Zhao, Chunguang & Liu, Yujiao & Zhao, Wenhao, 2024. "Is it possible for semiconductor companies to reduce carbon emissions through digital transformation? Evidence from China," International Journal of Production Economics, Elsevier, vol. 272(C).
    11. Quigley, John & Walls, Lesley & Demirel, Güven & MacCarthy, Bart L. & Parsa, Mahdi, 2018. "Supplier quality improvement: The value of information under uncertainty," European Journal of Operational Research, Elsevier, vol. 264(3), pages 932-947.
    12. Liesiö, Juuso & Salo, Ahti & Keisler, Jeffrey M. & Morton, Alec, 2021. "Portfolio decision analysis: Recent developments and future prospects," European Journal of Operational Research, Elsevier, vol. 293(3), pages 811-825.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Faiza Hamdi & Ahmed Ghorbel & Faouzi Masmoudi & Lionel Dupont, 2018. "Optimization of a supply portfolio in the context of supply chain risk management: literature review," Journal of Intelligent Manufacturing, Springer, vol. 29(4), pages 763-788, April.
    2. Mohammadivojdan, Roshanak & Merzifonluoglu, Yasemin & Geunes, Joseph, 2022. "Procurement portfolio planning for a newsvendor with supplier delivery uncertainty," European Journal of Operational Research, Elsevier, vol. 297(3), pages 917-929.
    3. Mohammed, Ahmed & Harris, Irina & Govindan, Kannan, 2019. "A hybrid MCDM-FMOO approach for sustainable supplier selection and order allocation," International Journal of Production Economics, Elsevier, vol. 217(C), pages 171-184.
    4. Scott, James & Ho, William & Dey, Prasanta K. & Talluri, Srinivas, 2015. "A decision support system for supplier selection and order allocation in stochastic, multi-stakeholder and multi-criteria environments," International Journal of Production Economics, Elsevier, vol. 166(C), pages 226-237.
    5. Kannan Govindan & R. Sivakumar, 2016. "Green supplier selection and order allocation in a low-carbon paper industry: integrated multi-criteria heterogeneous decision-making and multi-objective linear programming approaches," Annals of Operations Research, Springer, vol. 238(1), pages 243-276, March.
    6. Aly Owida & P.J. Byrne & Cathal Heavey & Paul Blake & Khaled S. El-Kilany, 2016. "A simulation based continuous improvement approach for manufacturing based field repair service contracting," International Journal of Production Research, Taylor & Francis Journals, vol. 54(21), pages 6458-6477, November.
    7. Fahimnia, Behnam & Jabbarzadeh, Armin, 2016. "Marrying supply chain sustainability and resilience: A match made in heaven," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 91(C), pages 306-324.
    8. Chao Fang & Xiangxiang Liao & Min Xie, 2016. "A hybrid risks-informed approach for the selection of supplier portfolio," International Journal of Production Research, Taylor & Francis Journals, vol. 54(7), pages 2019-2034, April.
    9. Kannan Govindan & R. Sivakumar, 2016. "Green supplier selection and order allocation in a low-carbon paper industry: integrated multi-criteria heterogeneous decision-making and multi-objective linear programming approaches," Annals of Operations Research, Springer, vol. 238(1), pages 243-276, March.
    10. García Alcaraz Jorge Luis & Alvarado Iniesta Alejandro & Maldonado Macías Aidé Araceli, 2013. "Selección de proveedores basada en análisis dimensional," Contaduría y Administración, Accounting and Management, vol. 58(3), pages 249-278, julio-sep.
    11. Wetzstein, Anton & Hartmann, Evi & Benton jr., W.C. & Hohenstein, Nils-Ole, 2016. "A systematic assessment of supplier selection literature – State-of-the-art and future scope," International Journal of Production Economics, Elsevier, vol. 182(C), pages 304-323.
    12. Hosseini, Seyedmohsen & Barker, Kash, 2016. "A Bayesian network model for resilience-based supplier selection," International Journal of Production Economics, Elsevier, vol. 180(C), pages 68-87.
    13. Heese, H. Sebastian, 2015. "Single versus multiple sourcing and the evolution of bargaining positions," Omega, Elsevier, vol. 54(C), pages 125-133.
    14. Xu, Jiuping & Ding, Can, 2011. "A class of chance constrained multiobjective linear programming with birandom coefficients and its application to vendors selection," International Journal of Production Economics, Elsevier, vol. 131(2), pages 709-720, June.
    15. Ali Ekici & Baṣak Altan & Okan Örsan Özener, 2016. "Pricing decisions in a strategic single retailer/dual suppliers setting under order size constraints," International Journal of Production Research, Taylor & Francis Journals, vol. 54(7), pages 1887-1898, April.
    16. Chang, Liu & Ouzrout, Yacine & Nongaillard, Antoine & Bouras, Abdelaziz & Jiliu, Zhou, 2014. "Multi-criteria decision making based on trust and reputation in supply chain," International Journal of Production Economics, Elsevier, vol. 147(PB), pages 362-372.
    17. Osiro, Lauro & Lima-Junior, Francisco R. & Carpinetti, Luiz Cesar R., 2014. "A fuzzy logic approach to supplier evaluation for development," International Journal of Production Economics, Elsevier, vol. 153(C), pages 95-112.
    18. Xu, Jianjun & Keblis, Matthew F. & Feng, Youyi & Chang, Yanling, 2017. "Optimal sourcing from a pool of suppliers with nonidentical salvage values," International Journal of Production Economics, Elsevier, vol. 193(C), pages 392-405.
    19. Torabi, S.A. & Baghersad, M. & Mansouri, S.A., 2015. "Resilient supplier selection and order allocation under operational and disruption risks," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 79(C), pages 22-48.
    20. Ho, William & Xu, Xiaowei & Dey, Prasanta K., 2010. "Multi-criteria decision making approaches for supplier evaluation and selection: A literature review," European Journal of Operational Research, Elsevier, vol. 202(1), pages 16-24, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ejores:v:245:y:2015:i:1:p:146-156. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eor .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.