Multisourcing suppliers selection in service outsourcing

• Published in: The Journal of the Operational Research Society Vol. 63; no. 5; pp. 582 - 596
• Main Author: Feng, B
• Format: Journal Article
• Language: English
• Published: London Taylor & Francis 01-05-2012; Palgrave Macmillan; Palgrave Macmillan UK; Taylor & Francis Ltd
• Series: Journal of the Operational Research Society
• Subjects: Algorithms; Applied sciences; Automobile manufacturers; bi-objective 0-1 programming; Business and Management; Cost control; Cultural values; Decision analysis; Decision making; Decision theory. Utility theory; different formats of preference information; Exact sciences and technology; Firm modelling; Furniture making; Fuzzy sets; General Paper; General Papers; Linear programming; Linguistics; Logistics; Management; Manufacturing industries; Manufacturing processes; Mathematical programming; Methods; Multisourcing; Operational research and scientific management; Operational research. Management science; Operations research; Operations Research/Decision Theory; Outsourcing; Portfolio theory; R&D; Research & development; Studies; Suppliers; different formats of preference information; bi-objective 0–1 programming; outsourcing; decision analysis; Multiobjective programming; Subcontracting; Modeling; Interval arithmetic; Linear model; Zero one programming; Stock exchange; Information value; Linguistics; Supplier; Pareto optimum; Branch and bound method; Decision making; Minimization; Similarity solution; Decision analysis; Preference; Problem solving; Aspiration level; Insurance company; Outsourcing; bi-objective 0―1 programming; Portfolio management; Graph matching; Logistics
• ISSN: 0160-5682; 1476-9360
• DOI: 10.1057/jors.2011.61

Multisourcing suppliers selection in service outsourcing involves selecting a supplier portfolio with a reasonable number of suppliers and better performance to cover aspiration levels of criteria. It is a specific weighted matching problem with new challenges. This paper proposes a decision method for solving this problem. In the proposed method, different formats of preference information, including numerical values, interval numbers and linguistic variables, are used to express alternative ratings. The technique for order preference by similarity to ideal solution is extended to aggregate the three formats of preference information. A bi-objective 0-1 linear programming model using the aggregated information is built to select a desired supplier portfolio, in which the objectives of minimization of suppliers number and maximization of supplier performance are involved. To solve this model, we transform it into an equivalent, and then an exact multi-objective branch-and-bound algorithm is developed to obtain Pareto-optimal solutions. In addition, a real case of an insurance company is used to illustrate the applicability of the proposed method.