Suppliers Selection for Sazeh Gostar Saipa Co. Using a Combination Approach of Analytic Network Process and Goal Programming

Suppliers Selection for Sazeh Gostar Saipa Co. Using a Combination Approach of Analytic Network Process and Goal Programming

Hassan Farsijani (Department of Industrial Management, University of Shahid – Beheshti, Tehran, Iran), Mohsen Shafiei Nikabadi (Department of Industrial Management, Faculty of Economics and Management, Semnan University, Semnan, Iran), Reza Malmir (Department of Technology Management, University of Shahid – Beheshti, Tehran, Iran) and Fatemeh Shakhsian (Department of Business Administration, University of Payam-e Noor, Tehran, Iran)
Copyright: © 2013 |Pages: 21
DOI: 10.4018/jal.2013010102

Abstract

Strategic evaluation and supplier selection, or strategic supply, is a main subject of supply chain management. Strategic evaluation and supplier selection is a multi-criteria decision problem, considering both tangible and intangible criteria and organizations are seeking various and sometimes opposite objectives in purchasing from suppliers. As the increasing rivalry in Iran’s auto industry, producers and suppliers face several challenges. Sazeh Gostar Saipa Co., the main supplier of Saipa automobile maker firm, is not exempt of this norm. Top managers of the company believe that the best supplier selection for long-term cooperation is vital for the implementation of corporate strategies. In this paper, using decision technique of Analytic Network Process (ANP) and Base Overhead Cost Recovery (BOCR), 20 tangible and intangible operational and strategic criteria are considered in the supplier selection decision through a suggested methodology. Different organizations’ goals in purchasing from suppliers that are ranked in the previous stage are formulated to determine the amount of supply allocation to each supplier based on goals. The innovation aspect and main goal of the research are suggesting a methodology for selecting suppliers and determining the amount of allocated orders to them with combining ANP method, BOCR structure and goal programming in Sazeh Gostar Saipa Co.
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2. The Problem Statement

It is noticeable that two kinds of problems exist in supplier selection problems; in type 1, supplier can provide all the needs of the organization. In type 2, a supplier can not to provide all needs of the organization on its own. As a result, management should decide to sort the suppliers and allocate the amount of orders based on desirability and preference. Thus, two questions must be answered in this kind of problem: first, which suppliers are the best, and second, how much should be bought from each supplier? (Erdogmus et al., 2008)

Two points are important in second kind of problem –that also included this research. What standards must be attended, what methods can be used to compare suppliers and finally how much the share of each supplier from amount of the order must be?

Furthermore, it should be noticed that supplier selection of the organization is a strategic decision and it has an effective role in supply chain and organization. Because of this strategic nature, supplier selection must be in the direction of organization’s strategy. But there is a question how to choose the proper supplier according to organization’s strategy in order to gaining the most opportunity and avoiding high costs and risks? Answering this question needs a systematic and complete evaluation. So, to reach the purpose, BOCR model can be used. This model has a completely systematic view, not only the short-term but also long-term targets are mentioned in the concept of this model. Also, positive and negative, tangible and intangible factors can be covered (Chao & Qing, 2007).

Therefore in this research, in order to evaluate and select the suppliers strategically, we are to answer the following question:

  • 1.

    Which are the effective criteria to select proper suppliers in Saipa Co. according to BOCR model?

  • 2.

    How is the importance of the final selected criteria?

  • 3.

    How to weigh and prioritize the criteria to rate components' suppliers?

  • 4.

    Which combination of suppliers meets the components' demand?

The Analytic Network Process (ANP) under Base Overhead Cost Recovery (BOCR) structure is used for selecting criteria and for allocating the orders to suppliers along the programming period, Goal programming is used with attention to different wanted Goals.

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