Case Study Of Vendor Selection Optimization In Supply Chain Management

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Vendor Selection Optimization In Supply Chain Management Abstract— An effective vendor selection process is very important to the success of any manufacturing organization. Simply looking for vendors offering the lowest prices is not efficient sourcing any more. We propose a multi-criteria decision making method, which accounts for both vendor selection and optimal order allocation. We also propose a policy for unselected vendors to maintain a competitive environment and derive maximum benefits. The model ranks vendors on the basis of their efficiency scores, derived from data envelopment analysis (DEA). These scores are then utilized in forming policies to retain the interest of unselected vendors in the selection process. Integer programming model is then used to select the vendors and allocate optimum order quantities to them based on their scores, while considering the buyer and vendor constraints.
Keywords— vendor, criteria, data envelopement analysis, integer programming

I. Introduction
A supply chain is a network which connects customers, vendors, inventories, and retailers, and each role plays part in providing customers with a service or product. The management of this chain has become a critical aspect in today’s fiercely competitive business environment. Supply Chain Management (SCM) is now an integral part of company activities covering areas such as purchasing management, transportation management, production management, ware housing management, inventory management etc. It basically includes the process of dealing with demand and managing the flow of products throughout the firm’s activities. One of the most important aspects in SCM is purchasing
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A potential use of evaluating the aggregate performance of vendors is to provide improvement targets for current vendors which aids in forming the policy for

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