Integrated model for Multi-criteria Supplier Selection and Order Allocation Problem

Abstract. This paper discusses an integrated model of selecting suppliers and order allocation for a company that wishes to decide the quantity to be ordered from each supplier on the basis of some qualitative criteria. Since each supplier may have a different performance with respect to these criteria, an integration of analytical hierarchy process and linear program model is proposed to solve the problem in two stages. In the first stage, suppliers are evaluated based on qualitative criteria to consider both tangible and intangible factors in choosing the best suppliers. The output of this stage is the final score of each supplier. In the second stage, a linear programming model is proposed to placing the optimum order quantities among them such that the total final scores of suppliers become maximum. The mathematical programming model is validated through numerical analysis, and the computation result shows that the model is effective and applicable. Keywords: supplier selection, order allocation, multiple criteria decision making, analytical hierarchy process, linear programming