A Short Review of Multi Criteria Decision Making Approaches for Supplier Selection Problem

A Short Review of Multi Criteria Decision Making Approaches for Supplier Selection Problem

Hale Gonce Kocken (Yildiz Technical University, Turkey) and Beyza Ahlatcioglu Ozkok (Yildiz Technical University, Turkey)
DOI: 10.4018/978-1-4666-5888-2.ch489
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Background

Supply chain management can be defined as the process of effective and efficient management of all events related to the flow and transformation of goods and services in a supply chain network. A typical supply chain network consists of several suppliers, manufacturing sites, distribution centers, retailers and customer zones, etc. The three major flows that occur in a supply chain are physical, information, and money (Lee, (2000)). Physical flow generally starts with the process of providing raw materials from several suppliers and finishes when the end customer is reached with a finished product. Information flow involves transmitting orders, manifest, invoice. Money flows covers all money transactions among all entities of a supply chain.

Basically, a supply chain aims to optimize its including decisions such as inventory levels, transportation, make or buy decision, facility location, supplier selection or as a whole whatever an organization does to plan, source, make and deliver its products. One of the significant decisions of supply chain management is the supplier selection process which can be defined as the core of purchasing function. Inherently, a supplier selection decision requires the ability to take multiple criteria and measures in order to arrive at a clear and straightforward prioritization or final selection (Ho, Xu, and Dey (2010)).

Key Terms in this Chapter

Multi Objective Decision Making: A sub-discipline of multi criteria decision making that considers decision making problem with multiple objective.

Multi Criteria Decision Making: A sub-discipline of operation research that considers multiple criteria for decision making problems.

Supplier: Supplier also called vendor, is a person or company that provides goods to other customers or companies.

Supplier Evaluation and Selection: The process of evaluation of suppliers to provide the highest satisfaction of the firms and customers.

Green Supply Chain Management: Supply chain management with environmentalist point of view.

Supply Chain Management: The optimizing process of supply chain activities that includes the decisions such as production, inventory, facility location, transportation, logistics to provide the highest degree of customer satisfaction and building a competitive infrastructure.

Evaluation Criteria: Specific criteria selected by decision makers to evaluate and compare alternatives.

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