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Considering Product Life Cycle Cost Purchasing Strategy for Solving Vendor Selection Problems

Author

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  • Chien-Wen Shen

    (Department of Business Administration, National Central University, No. 300, Jhongda Rd., Jhongli City 32001, Taiwan)

  • Yen-Ting Peng

    (Department of Business Administration, National Central University, No. 300, Jhongda Rd., Jhongli City 32001, Taiwan)

  • Chang-Shu Tu

    (Department of Information Management, Chang Gung University, Taiwan,259 Wen-Hwa 1st Road, Kwei-Shan, Tao-Yuan 33333, Taiwan
    Global Research & Industry Alliance, Nation Taiwan University of Science, Taipei City 10607, Taiwan
    Taiwan Express Co. Ltd., Taipei City 10491, Taiwan)

Abstract

The framework of product life cycle (PLC) cost analysis is one of the most important evaluation tools for a contemporary high-tech company in an increasingly competitive market environment. The PLC-purchasing strategy provides the framework for a procurement plan and examines the sourcing strategy of a firm. The marketing literature emphasizes that ongoing technological change and shortened life cycles are important elements in commercial organizations. From a strategic viewpoint, the vendor has an important position between supplier, buyer and manufacturer. The buyer seeks to procure the products from a set of vendors to take advantage of economies of scale and to exploit opportunities for strategic relationships. However, previous studies have seldom considered vendor selection (VS) based on PLC cost (VSPLCC) analysis. The purpose of this paper is to solve the VSPLCC problems considering the situation of a single buyer–multiple supplier. For this issue, a new VSPLCC procurement model and solution procedure are derived in this paper to minimize net cost, rejection rate, late delivery and PLC cost subject to vendor capacities and budget constraints. Moreover, a real case in Taiwan is provided to show how to solve the VSPLCC procurement problem.

Suggested Citation

  • Chien-Wen Shen & Yen-Ting Peng & Chang-Shu Tu, 2019. "Considering Product Life Cycle Cost Purchasing Strategy for Solving Vendor Selection Problems," Sustainability, MDPI, vol. 11(13), pages 1-17, July.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:13:p:3739-:d:246732
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    References listed on IDEAS

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    2. Yu-Jwo Tao & Yi-Shyuan Lin & Hsuan-Shih Lee & Guo-Ya Gan & Chang-Shu Tu, 2022. "Using a Product Life Cycle Cost Model to Solve Supplier Selection Problems in a Sustainable, Resilient Supply Chain," Sustainability, MDPI, vol. 14(4), pages 1-22, February.

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