A Study On Supplier Selection Risks And Strategies Based On Uncertainty

Due to the pressure of global corporation and competition,current supply chain management has dressing much more importance to the issue of supplier selection to the strategy level decision.At the same time,with the development of global procurement,various uncertainties such as earthquakes.fl oods,fires,labor strikes,terrorist attacks,financial crises,information asymmetry,are reflected in the upstream supplier supply capacity and downstream market demand.The decision situation is no longer accurate as past,and the imbalance between supply and demand exposes companies to risks of cost fluctuations and non-compliance orders.When making a supplier selection strategy,enterprises should not only deal with traditional issues such as which suppliers to choose and how many orders to allocate,but also should combine their attitudes toward risk and choose sets of suppliers which have sufficient capacity to resist risks,while balancing cost,service level and lean supplier numbers.Manufacturers will face a backlog of inventory or a shortage of supply,causing great losses if the above risks cannot be taken into account when making supplier decisions.Therefore.exploring the uncertain factors and the resulting operational risk and disruption risk have important theoretical and practical guiding significance for supplier decision-making.Based on the relevant literature review,we summarize the relationship between the uncertainty and risks in the context of the supplier selection problem as well as the characteristics of the decision-making process and research methods.Then on the base of the deterministic multi-objective mixed integer programming,we propose two probabilistic models which incorporate uncertainty from supplier capacity and demand into the supplier selection,aiming to find a minimal set of suppliers and the lowest costs by five sets of computational experiments.In the scenario-based two-sta.ge stochastic programming model,we use the penalty coefficient and risk measurement CVaR to explore the influence of decision makers' risk bias on the supplier selection strategy.When it comes to the chance-constraint model which constrains the probability of not meeting the demand,the selection results of the three models are compared and summarized.In addition,a multi-parametric programming is also established to obtain robust decisions in a closed form.Through the analysis of the experimental results,we find that with the decrease of the number of optional suppliers,the uncertainty factor,the risk of cost fluctuation,and the risk of non-compliance orders impose more impact on the supplier selection strategy.The stochastic programming model based on risk preference finds that the slight increase in the expected cost budget will significantly reduce the risk of cost fluctuation through the introduction of CVaR.The smaller the number of suppliers,the higher the risk faced by decision makers.It also helps decision makers identify vendor selection strategies that are more suitable for risk-averse than risk-neutral decisions.The chance constraint programming model finds that the total cost,quality flexibility and distribution flexibility of the supplier increase with the increase of system reliability.The fewer the number of optional suppliers,the higher the sensitivity of decision-making combination to system reliability.It has also been found that the supplier selection strategy that considers the risk of cost fluctuations in stochastic planning is actually a special case of the risk of non-compliance order in the chance constraint model.