IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v230y2020ics092552732030178x.html
   My bibliography  Save this article

Portfolio optimisation of material purchase considering supply risk – A multi-objective programming model

Author

Listed:
  • Hao, Jun
  • Li, Jianping
  • Wu, Dengsheng
  • Sun, Xiaolei

Abstract

For the sake of better coping with the problem of material procurement, a multi-objective optimisation model was established in a systematic analysis framework for material procurement considering supply risk. First, this paper combs and identifies supply risk factors and constructs a supply risk evaluation system from the dimensions of quality, price, delivery, service and technology. Second, based on the linguistic scale and fuzzy theory, this paper measures the supply risk of candidate suppliers and estimates the relevant parameters of the multi-objective optimisation model by using the triangular fuzzy numbers. In addition, an improved non-dominated sorting genetic algorithm II (NSGA-II) is utilized in this paper to solve the multi-objective model, since traditional intelligent algorithms have slow convergence speed and are easily trapping into local optimisation. Finally, this paper conducts simulation experiments by setting three types of decision-makers with different risk preferences and provides material procurement combination schemes in different scenarios. Through numerical simulation experiments, it was verified that the optimisation model established in this paper was feasible and useful for the selection of candidate suppliers and the portfolio optimisation of material procurement.

Suggested Citation

  • Hao, Jun & Li, Jianping & Wu, Dengsheng & Sun, Xiaolei, 2020. "Portfolio optimisation of material purchase considering supply risk – A multi-objective programming model," International Journal of Production Economics, Elsevier, vol. 230(C).
    • Handle: RePEc:eee:proeco:v:230:y:2020:i:c:s092552732030178x
    DOI: 10.1016/j.ijpe.2020.107803
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S092552732030178X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2020.107803?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. Chai, Junyi & Ngai, Eric W.T., 2015. "Multi-perspective strategic supplier selection in uncertain environments," International Journal of Production Economics, Elsevier, vol. 166(C), pages 215-225.
    2. Almeder, Christian, 2010. "A hybrid optimization approach for multi-level capacitated lot-sizing problems," European Journal of Operational Research, Elsevier, vol. 200(2), pages 599-606, January.
    3. Vanteddu, Gangaraju & Chinnam, Ratna Babu & Gushikin, Oleg, 2011. "Supply chain focus dependent supplier selection problem," International Journal of Production Economics, Elsevier, vol. 129(1), pages 204-216, January.
    4. Velez, Sara & Dong, Yachao & Maravelias, Christos T., 2017. "Changeover formulations for discrete-time mixed-integer programming scheduling models," European Journal of Operational Research, Elsevier, vol. 260(3), pages 949-963.
    5. Chen, Kuen-Suan & Wang, Ching-Hsin & Tan, Kim-Hua, 2019. "Developing a fuzzy green supplier selection model using six sigma quality indices," International Journal of Production Economics, Elsevier, vol. 212(C), pages 1-7.
    6. Ghodsypour, S. H. & O'Brien, C., 1998. "A decision support system for supplier selection using an integrated analytic hierarchy process and linear programming," International Journal of Production Economics, Elsevier, vol. 56(1), pages 199-212, September.
    7. Cunha, Artur Lovato & Santos, Maristela Oliveira & Morabito, Reinaldo & Barbosa-Póvoa, Ana, 2018. "An integrated approach for production lot sizing and raw material purchasing," European Journal of Operational Research, Elsevier, vol. 269(3), pages 923-938.
    8. Behzadi, Golnar & O’Sullivan, Michael Justin & Olsen, Tava Lennon & Zhang, Abraham, 2018. "Agribusiness supply chain risk management: A review of quantitative decision models," Omega, Elsevier, vol. 79(C), pages 21-42.
    9. Zare, Marjan & Esmaeili, Maryam & He, Yuanjie, 2019. "Implications of risk-sharing strategies on supply chains with multiple retailers and under random yield," International Journal of Production Economics, Elsevier, vol. 216(C), pages 413-424.
    10. Giannakis, Mihalis & Papadopoulos, Thanos, 2016. "Supply chain sustainability: A risk management approach," International Journal of Production Economics, Elsevier, vol. 171(P4), pages 455-470.
    11. Aqlan, Faisal & Lam, Sarah S., 2015. "A fuzzy-based integrated framework for supply chain risk assessment," International Journal of Production Economics, Elsevier, vol. 161(C), pages 54-63.
    12. 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.
    13. Dong, Qingxing & Cooper, Orrin, 2016. "An orders-of-magnitude AHP supply chain risk assessment framework," International Journal of Production Economics, Elsevier, vol. 182(C), pages 144-156.
    14. Olivier Lavastre & A. Gunasekaran & Alain Spalanzani, 2012. "Supply chain risk management in french companies," Post-Print halshs-00740450, HAL.
    15. Froud, Julie & Johal, Sukhdev & Leaver, Adam & Williams, Karel, 2014. "Financialization across the Pacific: Manufacturing cost ratios, supply chains and power," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 25(1), pages 46-57.
    16. Achzet, Benjamin & Helbig, Christoph, 2013. "How to evaluate raw material supply risks—an overview," Resources Policy, Elsevier, vol. 38(4), pages 435-447.
    17. Wan, Chengpeng & Yan, Xinping & Zhang, Di & Qu, Zhuohua & Yang, Zaili, 2019. "An advanced fuzzy Bayesian-based FMEA approach for assessing maritime supply chain risks," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 125(C), pages 222-240.
    18. Nooraie, S. Vahid & Mellat Parast, Mahour, 2015. "A multi-objective approach to supply chain risk management: Integrating visibility with supply and demand risk," International Journal of Production Economics, Elsevier, vol. 161(C), pages 192-200.
    19. Sreedevi, R. & Saranga, Haritha, 2017. "Uncertainty and supply chain risk: The moderating role of supply chain flexibility in risk mitigation," International Journal of Production Economics, Elsevier, vol. 193(C), pages 332-342.
    20. Jasiński, Dominik & Cinelli, Marco & Dias, Luis C. & Meredith, James & Kirwan, Kerry, 2018. "Assessing supply risks for non-fossil mineral resources via multi-criteria decision analysis," Resources Policy, Elsevier, vol. 58(C), pages 150-158.
    21. Sun, Xiaolei & Liu, Chang & Chen, Xiuwen & Li, Jianping, 2017. "Modeling systemic risk of crude oil imports: Case of China’s global oil supply chain," Energy, Elsevier, vol. 121(C), pages 449-465.
    22. Plaza, Malgorzata & David, Iulian & Shirazi, Farid, 2018. "Management of inventory under market fluctuations the case of a Canadian high tech company," International Journal of Production Economics, Elsevier, vol. 205(C), pages 215-227.
    23. Amorim, Pedro & Curcio, Eduardo & Almada-Lobo, Bernardo & Barbosa-Póvoa, Ana P.F.D. & Grossmann, Ignacio E., 2016. "Supplier selection in the processed food industry under uncertainty," European Journal of Operational Research, Elsevier, vol. 252(3), pages 801-814.
    24. Tang, Christopher & Tomlin, Brian, 2008. "The power of flexibility for mitigating supply chain risks," International Journal of Production Economics, Elsevier, vol. 116(1), pages 12-27, November.
    25. Vilko, Jyri P.P. & Hallikas, Jukka M., 2012. "Risk assessment in multimodal supply chains," International Journal of Production Economics, Elsevier, vol. 140(2), pages 586-595.
    26. Crama, Y. & Pascual J., R. & Torres, A., 2004. "Optimal procurement decisions in the presence of total quantity discounts and alternative product recipes," European Journal of Operational Research, Elsevier, vol. 159(2), pages 364-378, December.
    27. García-Rodríguez, Francisco J. & Castilla-Gutiérrez, Carlos & Bustos-Flores, Carlos, 2013. "Implementation of reverse logistics as a sustainable tool for raw material purchasing in developing countries: The case of Venezuela," International Journal of Production Economics, Elsevier, vol. 141(2), pages 582-592.
    28. Hashemi, Seyed Hamid & Karimi, Amir & Tavana, Madjid, 2015. "An integrated green supplier selection approach with analytic network process and improved Grey relational analysis," International Journal of Production Economics, Elsevier, vol. 159(C), pages 178-191.
    29. Bai, Chunguang & Sarkis, Joseph, 2010. "Integrating sustainability into supplier selection with grey system and rough set methodologies," International Journal of Production Economics, Elsevier, vol. 124(1), pages 252-264, March.
    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. Chen, Linlin & Han, Shuihua & Ye, Zhen & Xia, Senmao, 2023. "The optimisation of the location of front distribution centre: A spatio-temporal joint perspective," International Journal of Production Economics, Elsevier, vol. 263(C).
    2. Zhou, Rui & Bhuiyan, Tanveer Hossain & Medal, Hugh R. & Sherwin, Michael D. & Yang, Dong, 2022. "A stochastic programming model with endogenous uncertainty for selecting supplier development programs to proactively mitigate supplier risk," Omega, Elsevier, vol. 107(C).
    3. Hao, Jun & Feng, Qianqian & Yuan, Jiaxin & Sun, Xiaolei & Li, Jianping, 2022. "A dynamic ensemble learning with multi-objective optimization for oil prices prediction," Resources Policy, Elsevier, vol. 79(C).

    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. Nishat Alam Choudhary & Shalabh Singh & Tobias Schoenherr & M. Ramkumar, 2023. "Risk assessment in supply chains: a state-of-the-art review of methodologies and their applications," Annals of Operations Research, Springer, vol. 322(2), pages 565-607, March.
    2. 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.
    3. Qazi, Abroon & Dickson, Alex & Quigley, John & Gaudenzi, Barbara, 2018. "Supply chain risk network management: A Bayesian belief network and expected utility based approach for managing supply chain risks," International Journal of Production Economics, Elsevier, vol. 196(C), pages 24-42.
    4. Amirmahdi Malek & Sadoullah Ebrahimnejad & Reza Tavakkoli-Moghaddam, 2017. "An Improved Hybrid Grey Relational Analysis Approach for Green Resilient Supply Chain Network Assessment," Sustainability, MDPI, vol. 9(8), pages 1-28, August.
    5. Cunha, Artur Lovato & Santos, Maristela Oliveira & Morabito, Reinaldo & Barbosa-Póvoa, Ana, 2018. "An integrated approach for production lot sizing and raw material purchasing," European Journal of Operational Research, Elsevier, vol. 269(3), pages 923-938.
    6. 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.
    7. Mahdi Bashiri & Benny Tjahjono & Jordon Lazell & Jennifer Ferreira & Tomy Perdana, 2021. "The Dynamics of Sustainability Risks in the Global Coffee Supply Chain: A Case of Indonesia–UK," Sustainability, MDPI, vol. 13(2), pages 1-20, January.
    8. Shafiee, Mohammad & Zare-Mehrjerdi, Yahia & Govindan, Kannan & Dastgoshade, Sohaib, 2022. "A causality analysis of risks to perishable product supply chain networks during the COVID-19 outbreak era: An extended DEMATEL method under Pythagorean fuzzy environment," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 163(C).
    9. Mubarik, Muhammad Shujaat & Kazmi, Syed Hasnain Alam & Zaman, Syed Imran, 2021. "Application of gray DEMATEL-ANP in green-strategic sourcing," Technology in Society, Elsevier, vol. 64(C).
    10. Qingyou Yan & Meijuan Zhang & Wei Li & Guangyu Qin, 2020. "Risk Assessment of New Energy Vehicle Supply Chain Based on Variable Weight Theory and Cloud Model: A Case Study in China," Sustainability, MDPI, vol. 12(8), pages 1-21, April.
    11. Lin, Yongjia & Fan, Di & Shi, Xuanyi & Fu, Maggie, 2021. "The effects of supply chain diversification during the COVID-19 crisis: Evidence from Chinese manufacturers," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 155(C).
    12. Oliva, Fábio Lotti, 2016. "A maturity model for enterprise risk management," International Journal of Production Economics, Elsevier, vol. 173(C), pages 66-79.
    13. Ananna Paul & Nagesh Shukla & Sanjoy Kumar Paul & Andrea Trianni, 2021. "Sustainable Supply Chain Management and Multi-Criteria Decision-Making Methods: A Systematic Review," Sustainability, MDPI, vol. 13(13), pages 1-28, June.
    14. Muhammad Junaid & Ye Xue & Muzzammil Wasim Syed & Ji Zu Li & Muhammad Ziaullah, 2019. "A Neutrosophic AHP and TOPSIS Framework for Supply Chain Risk Assessment in Automotive Industry of Pakistan," Sustainability, MDPI, vol. 12(1), pages 1-26, December.
    15. 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.
    16. Ting-Kwei Wang & Qian Zhang & Heap-Yih Chong & Xiangyu Wang, 2017. "Integrated Supplier Selection Framework in a Resilient Construction Supply Chain: An Approach via Analytic Hierarchy Process (AHP) and Grey Relational Analysis (GRA)," Sustainability, MDPI, vol. 9(2), pages 1-26, February.
    17. Manavalan Ethirajan & Thanigai Arasu M & Jayakrishna Kandasamy & Vimal K.E.K & Simon Peter Nadeem & Anil Kumar, 2021. "Analysing the risks of adopting circular economy initiatives in manufacturing supply chains," Business Strategy and the Environment, Wiley Blackwell, vol. 30(1), pages 204-236, January.
    18. Chih-Hung Hsu & Ru-Yue Yu & An-Yuan Chang & Wan-Ling Liu & An-Ching Sun, 2022. "Applying Integrated QFD-MCDM Approach to Strengthen Supply Chain Agility for Mitigating Sustainable Risks," Mathematics, MDPI, vol. 10(4), pages 1-41, February.
    19. Dadsena, Krishna Kumar & Sarmah, S.P. & Naikan, V.N.A. & Jena, Sarat Kumar, 2019. "Optimal budget allocation for risk mitigation strategy in trucking industry: An integrated approach," Transportation Research Part A: Policy and Practice, Elsevier, vol. 121(C), pages 37-55.
    20. Abroon Qazi & Mecit Can Emre Simsekler & Steven Formaneck, 2023. "Supply chain risk network value at risk assessment using Bayesian belief networks and Monte Carlo simulation," Annals of Operations Research, Springer, vol. 322(1), pages 241-272, March.

    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:proeco:v:230:y:2020:i:c:s092552732030178x. 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/ijpe .

    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.