A novel method for supplier selection by two competitors, including multiple criteria

Abstract

Nowadays, all market components are competing with each other. Supplier selection among different manufacturers is one of the most important aspects of competition among market participants. In this paper, we study a supplier selection taking into consideration three key criteria: price, quality and delivery performance. A game theory-based model is proposed for the problem in such a way that each buyer tries not only to optimise his/her own problem but also to remove the other buyers from their optimum points. We apply a combination of multi-criteria decisionmaking methods and an extension of the ordinal game theory to find the Nash equilibrium for selecting the right supplier in a competitive market. The success of this model will be supported by a numerical example.

Supplier selection in a single-echelon supply chain with horizontal competition using Imperialist competitive algorithm

“…The most relevant study to the present paper is the one by Kermani, Navidi, and Alborzi (2012). They proposed a International Journal of Computer Integrated Manufacturing 3 model based on the Ordinal game theory and Topsis as a MADM tool.…”

“…Supplier selection is one of the most important activities in supply chain management (Kermani, Navidi, and Alborzi 2012). Supplier selection is one of the most important activities in supply chain management (Kermani, Navidi, and Alborzi 2012).…”

“…Manufacturers try to select the best portfolio of suppliers assuming three criteria: price, quality and delivery performance (Kermani, Navidi, and Alborzi 2012;Amid, Ghodsypour, and O'Brien 2011, 2006. Manufacturers try to select the best portfolio of suppliers assuming three criteria: price, quality and delivery performance (Kermani, Navidi, and Alborzi 2012;Amid, Ghodsypour, and O'Brien 2011, 2006.…”

“…(Kermani, Navidi, and Alborzi 2012). (4) Similar to real-world situations, suppliers supply demand of manufacturers with different prices (because of factors such as long-term contract, cooperation backgrounds, etc.)…”

“…Moreover, according to real world in this paper, each manufacturer tries not only to optimise his/her own situation but also to remove the other buyers from their optimum points to grow in the supply chain (similar to that discussed in Kermani, Navidi, and Alborzi 2012). Another characteristic of the solution method is that suppliers assign to manufacturers such that total utility in the manufacturer level is maximised.…”