IDEAS home Printed from https://ideas.repec.org/a/eee/jomega/v32y2004i1p9-15.html
   My bibliography  Save this article

How many suppliers are best? A decision-analysis approach

Author

Listed:
  • Berger, Paul D.
  • Gerstenfeld, Arthur
  • Zeng, Amy Z.

Abstract

As more supply chains are becoming dependent upon suppliers, an interruption of supply networks can obstruct the functionality of the entire supply chain. The purpose of this paper is to present what we believe is a useful way to think about the number of suppliers needed in the presence of risks. We model the decision-making process using a decision tree approach. We consider catastrophic, "super-events," which affect many/all suppliers, as well as "unique events" that affect only a single supplier. The probabilities of these events, the financial loss caused by disasters, and the operating cost of working with multiple suppliers are captured by decision trees, from which the expected cost function is obtained and the optimal number of suppliers is determined. Our methodology will help purchasing managers, materials management, as well as academics that are considering such issues.

Suggested Citation

  • Berger, Paul D. & Gerstenfeld, Arthur & Zeng, Amy Z., 2004. "How many suppliers are best? A decision-analysis approach," Omega, Elsevier, vol. 32(1), pages 9-15, February.
    • Handle: RePEc:eee:jomega:v:32:y:2004:i:1:p:9-15
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0305-0483(03)00100-2
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    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. Berger, Paul D. & Bechwati, Nada Nasr, 2001. "The allocation of promotion budget to maximize customer equity," Omega, Elsevier, vol. 29(1), pages 49-61, February.
    2. Weatherford, M. Stephen, 1998. "The President's Call: Executive Leadership from FDR to George Bush. By Judith E. Michaels. Pittsburgh, PA: University of Pittsburgh Press, 1997. 348p. $50.00 cloth, $22.95 paper. - FDR and the Modern ," American Political Science Review, Cambridge University Press, vol. 92(2), pages 467-469, June.
    3. Swift, Cathy Owens, 1995. "Preferences for single sourcing and supplier selection criteria," Journal of Business Research, Elsevier, vol. 32(2), pages 105-111, February.
    Full references (including those not matched with items on IDEAS)

    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. Wang, Deshen & Chen, Bintong & Chen, Jing, 2019. "Credit card fraud detection strategies with consumer incentives," Omega, Elsevier, vol. 88(C), pages 179-195.
    2. Martín-Herrán, Guiomar & McQuitty, Shaun & Sigué, Simon Pierre, 2012. "Offensive versus defensive marketing: What is the optimal spending allocation?," International Journal of Research in Marketing, Elsevier, vol. 29(2), pages 210-219.
    3. Liao, Zhiying & Rittscher, Jens, 2007. "Integration of supplier selection, procurement lot sizing and carrier selection under dynamic demand conditions," International Journal of Production Economics, Elsevier, vol. 107(2), pages 502-510, June.
    4. Pfeifer, Phillip E. & Ovchinnikov, Anton, 2011. "A Note on Willingness to Spend and Customer Lifetime Value for Firms with Limited Capacity," Journal of Interactive Marketing, Elsevier, vol. 25(3), pages 178-189.
    5. Baskaran, Venkatesan & Nachiappan, Subramanian & Rahman, Shams, 2012. "Indian textile suppliers' sustainability evaluation using the grey approach," International Journal of Production Economics, Elsevier, vol. 135(2), pages 647-658.
    6. 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.
    7. Hans Buhl & Robert Klein & Johannes Kolb & Andrea Landherr, 2011. "CR 2 M—an approach for capacity control considering long-term effects on the value of a customer for the company," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 22(2), pages 187-204, December.
    8. Chiang, Lan-Lung (Luke) & Yang, Chin-Sheng, 2018. "Does country-of-origin brand personality generate retail customer lifetime value? A Big Data analytics approach," Technological Forecasting and Social Change, Elsevier, vol. 130(C), pages 177-187.
    9. Berry, Leonard L. & Bolton, Ruth N. & Bridges, Cheryl H. & Meyer, Jeffrey & Parasuraman, A. & Seiders, Kathleen, 2010. "Opportunities for Innovation in the Delivery of Interactive Retail Services," Journal of Interactive Marketing, Elsevier, vol. 24(2), pages 155-167.
    10. Chang, Shuhua & Zhang, Zhaowei & Wang, Xinyu & Dong, Yan, 2020. "Optimal acquisition and retention strategies in a duopoly model of competition," European Journal of Operational Research, Elsevier, vol. 282(2), pages 677-695.
    11. Holm, Morten & Kumar, V. & Plenborg, Thomas, 2016. "An investigation of Customer Accounting systems as a source of sustainable competitive advantage," Advances in accounting, Elsevier, vol. 32(C), pages 18-30.
    12. Ching-Ter Chang & Huang-Mu Chen & Zheng-Yun Zhuang, 2014. "Integrated multi-choice goal programming and multi-segment goal programming for supplier selection considering imperfect-quality and price-quantity discounts in a multiple sourcing environment," International Journal of Systems Science, Taylor & Francis Journals, vol. 45(5), pages 1101-1111, May.
    13. Hans Buhl & Martin Gneiser & Julia Heidemann, 2009. "Ein modelltheoretischer Ansatz zur Planung von Investitionen in Kundenbeziehungen," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 20(2), pages 175-195, October.
    14. Tarek Ben Rhouma & Georges Zaccour, 2018. "Optimal Marketing Strategies for the Acquisition and Retention of Service Subscriber," Management Science, INFORMS, vol. 64(6), pages 2609-2627, June.
    15. 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.
    16. R C Hanna & P D Berger & L J Abendroth, 2005. "Optimizing time limits in retail promotions: an email application," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 56(1), pages 15-24, January.
    17. Xuedong Liang & Jinrui Miao & Yanjie Li & Xu Yang & Zhi Li, 2020. "Hazardous Waste Disposal Enterprise Selection in China Using Hesitant Fuzzy PROMETHEE," IJERPH, MDPI, vol. 17(12), pages 1-18, June.
    18. Jesús Sánchez-Oro & Ana D. López-Sánchez & Anna Martínez-Gavara & Alfredo G. Hernández-Díaz & Abraham Duarte, 2021. "A Hybrid Strategic Oscillation with Path Relinking Algorithm for the Multiobjective k -Balanced Center Location Problem," Mathematics, MDPI, vol. 9(8), pages 1-21, April.
    19. Chen, Chien-Ming, 2009. "A fuzzy-based decision-support model for rebuy procurement," International Journal of Production Economics, Elsevier, vol. 122(2), pages 714-724, December.
    20. Dey, Prasanta Kumar & Bhattacharya, Arijit & Ho, William, 2015. "Strategic supplier performance evaluation: A case-based action research of a UK manufacturing organisation," International Journal of Production Economics, Elsevier, vol. 166(C), pages 192-214.

    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:jomega:v:32:y:2004:i:1:p:9-15. 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/wps/find/journaldescription.cws_home/375/description#description .

    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.