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Multiobjective vendor allocation in multiechelon inventory systems: a spreadsheet model

  • Theoretical Paper
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Journal of the Operational Research Society

Abstract

The vendor selection problem (VSP) is a critical element of the numerous managerial decisions in the consideration of both outsourcing and integrated supply chain management. Many papers in the literature have dealt with VSPs from a multicriteria perspective, but few have looked into the implications of such decisions in a multiechelon supply chain with the explicit consideration of multiple time-phased demands. A new integrated supply chain model is proposed for a multiechelon supply chain. This model takes into account the usual cost objective and other important criteria in a multiechelon supply chain ranging from the most upstream suppliers' quality to end customers' satisfaction level through a large-scale multiobjective linear programme (MOLP). Furthermore, various Pareto optimal solutions can be graphically presented to facilitate decision making and negotiations with existing and potential suppliers.

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Appendix

Appendix

The scenario for computational results described above is described in this Appendix. The various procurement and storage parameters and capacities are listed in Table A1.

Table a1 Procurement and storage parameters and capacities for scenario

The procurement lead times from linked suppliers are shown in Table A2. The procurement schedules are shown in Table A3, and were assumed to recur every two weeks.

Table a2 Procurement lead times
Table a3 Procurement schedule

Other than the procurement lead times, varying lead times are encountered for the various transportation modes. The various transportation lead times for the supply chain network topology of the TEN model are listed in Table A4. The routing schedules for the various modes of transportation in the supply chain network and their associated capacities are shown in Table A5. The routing schedule recurs every week, hence, only the weekly schedule is shown.

Table a4 Routing lead times
Table a5 Routing schedules and capacities

The routing parameters and capacity usage per unit of product or SKU shipped are shown in Table A6.

Table a6 Routing parameters

The production parameters and related production capacities are shown in Table A7. The revenues per unit of product sold are also shown in Table A7.

Table a7 Production parameters and capacities and revenues

In addition, the lost sales costs for unmet demands at demand nodes and disposal costs for excessive inventories at the various storage locations are shown in Table A8.

Table a8 Lost sales and disposal costs

The profiles of expected demands over a 26 weeks (182 days) period at the two DCs and four retailers are shown in Figure A1

Figure A1
figure 6

Demand patterns at retailers and distribution centers.

Apart from the preceding specifications, initial conditions related to the state of supply chain when decisions are made have to be specified. The state of supply chain contains information of existing pipeline inventories and existing nodal inventories. These are shown in Table A9 and Figure A2.

Table a9 Existing nodal inventory
Figure A2
figure 7

Initial pipeline inventory levels.

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Lam, S., Tang, L. Multiobjective vendor allocation in multiechelon inventory systems: a spreadsheet model. J Oper Res Soc 57, 561–578 (2006). https://doi.org/10.1057/palgrave.jors.2602027

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