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A practical expected-value-approach model to assess the relevant procurement costs

Author

Listed:
  • Ching-Ter Chang

    (The Graduate Institute of Business Management, Chang Gung University, Taiwan)

  • Yan-Yu Chou

    (Management College, National Kaohsiung University of Applied Sciences, Taiwan)

  • Zheng-Yun Zhuang

    (School of Computer and Computing Science, City College, Zhejiang University, China)

Abstract

As an improvement to a series of expected value approach models, this study presents a supplier portfolio decision model, rather than a number of suppliers decision model. The model assesses risks as costs, considers types of heterogeneity in a procurement process and links the assessed terms in the programming model with accounting concepts. The model is then confirmed by using a procurement decision case with real data. The analysis has several implications for modelling, application and practice. In the light of the counterexamples shown, some thoughts pertaining to procurement decisions in supply management are reconsidered.

Suggested Citation

  • Ching-Ter Chang & Yan-Yu Chou & Zheng-Yun Zhuang, 2015. "A practical expected-value-approach model to assess the relevant procurement costs," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 66(4), pages 539-553, April.
    • Handle: RePEc:pal:jorsoc:v:66:y:2015:i:4:p:539-553
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