Multi-period demand allocation among supplier in a supply chain

Abstract

Purpose

This paper aims to address the problem of optimal allocation of demand of items among candidate suppliers to maximize the purchase value of items. The purchase value of the items directly relates to cost and quality of raw materials purchased from the supplier. In an increasingly competitive environment, firms are paying more attention to selecting the right suppliers for procurement of raw materials and component parts for their products. The present research work focuses on this issue of supply chain management.

Design/methodology/approach

This present research work devises a hybrid algorithm for multi-period demand allocation among the suppliers. The customer demand is allocated by using a hybrid algorithm based on the technique for order preference by similarity to ideal solution (TOPSIS), fuzzy set theory and the mixed linear integer programming (MILP) approaches.

Findings

The supply chain network is witnessing a changing business environment due to government policies aimed at promoting new small manufacturing enterprises (small and medium-sized enterprises) for intermediate parts and components. Hence, the managers have an option to select a new group of suppliers and allocate the optimal multi-period demand among the new group of suppliers to maximize their purchase value. In this context, the proposed hybrid model would be beneficial for the managers to operate their supply chain effectively and efficiently. The present research work will be helpful for the managers who are interested to reconfigure their supply chain under the failure of any supply chain partner or in a changing business environment. The model provides flexibility to the managers for evaluation of the different available alternatives to take a decision of optimal demand allocation among the suppliers. The proposed hybrid (fuzzy, TOPSIS and MILP) model provides more objective information for supplier evaluation and demand allocation among suppliers in a supply chain. The managers can use the proposed model to the analysis of other management decision-making problems.

Originality/value

This present research work devises a hybrid algorithm for multi-period demand allocation among the suppliers. This hybrid algorithm prioritizes the suppliers and then allocates the multi-period demand among the suppliers. The customer demand is allocated by using a hybrid algorithm based on the technique for order preference by similarity to ideal solution (TOPSIS), fuzzy set theory and the mixed linear integer programming (MILP) approaches.

Citation

Singh, A. (2015), "Multi-period demand allocation among supplier in a supply chain", Journal of Modelling in Management, Vol. 10 No. 2, pp. 138-157. https://doi.org/10.1108/JM2-09-2013-0046