Order Allocation In Multiple Supplier Environment: A Case Study Of A Plastic Company

Abstract

This study focuses on debate on an area of emerging research: evaluating multiple sourcing strategy to determine which strategy brings more benefits to their business. The effects of supplier selection and order allocation procedures are the base to be considered so that total purchasing cost is minimized at any time of an order while satisfying a specific service level. For this purpose, analytical hierarchy process is conducted and a linear programming with minimizing total cost objective is proposed in order to alleviate the problem and obtain the most optimal solutions. The numerical example is solved using CPLEX and the results are compared. The sensitivity analysis demonstrates the flexibility and efficiency of the proposed model in the different change conditions. The final part of the paper summarizes the conclusions and suggest a new direction for future research to expand problem more extensively.