A robust optimisation approach to the problem of supplier selection and allocation in outsourcing

Yelin Fu, Kin Keung Lai and Liang Liang

International Journal of Systems Science, 2016, vol. 47, issue 4, 913-918

Abstract: We formulate the supplier selection and allocation problem in outsourcing under an uncertain environment as a stochastic programming problem. Both the decision-maker's attitude towards risk and the penalty parameters for demand deviation are considered in the objective function. A service level agreement, upper bound for each selected supplier's allocation and the number of selected suppliers are considered as constraints. A novel robust optimisation approach is employed to solve this problem under different economic situations. Illustrative examples are presented with managerial implications highlighted to support decision-making.

Date: 2016
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DOI: 10.1080/00207721.2014.907970

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