An integrated approach using utility theory and chance-constrained programming for supplier quota allocation

Manoj Kumar, Prem Vrat and Ravi Shankar

International Journal of Integrated Supply Management, 2006, vol. 2, issue 1/2, 132-148

Abstract: In this paper, a solution procedure based on utility theory and chance-constrained programming is developed to solve a supplier quota allocation problem. The objectives of the problem incorporate maximisation of sales revenues, quality and on-time delivery. Some realistic constraints such as buyers' demand, budget allocation to individual vendors, etc. are also modelled in this problem. The proposed approach allows us to handle random aspects of input information. The effect of different levels of uncertainties is also analysed to understand how quota allocation to suppliers changes and how some of the suppliers lose their quota in an uncertain environment. A case illustration of a real automobile manufacturer is provided which shows the effectiveness and application of the model to suppliers' quota allocation problem in a supply chain.

Keywords: supply chain management; SCM; supplier quota allocation; utility theory; chance-constrained programming; uncertainty; automobile industry. (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijisma:v:2:y:2006:i:1/2:p:132-148

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