A cost efficiency approach for strategic vendor selection problem under certain input prices assumption

Abstract

Strategic vendor selection problem (VSP) has been investigated in different purchasing literature during the last two decades. Indeed, senior purchasing managers always deal with such crucial decisions. Manufacturing managers in the global market are faced with challenging and complex tasks very similar to VSP. Increasing outsourcing and opportunity provided by automotive industry to the worldwide markets make these decisions, even more, complex. Various methodologies, from simple weighted scoring methods to complex mathematical programming models, are introduced to tackle the VSP.

Data envelopment analysis (DEA) is a non-parametric method in operations research and economics for evaluating the productive efficiency of decision-making units (DMUs). This study utilizes the proposed approach in Toloo and Ertay (2014) to develop a method for finding the most cost efficient DMU when the prices are fixed and known. A case study of an automotive company located in Turkey is adapted from the literature to illustrate the potential application of the suggested approach.