An analytical approach for evaluating and selecting vendors with interdependent performance in a supply chain

In this paper, we develop an analytically based approach for the selection of vendors in a supply chain. In the selection process, the approach considers salient performance attributes necessary for a reliable chain. Additionally, it takes into account the effect of the vendors' interaction costs stemming from conflicts of interest among them. Most important, it compares the pool of available suppliers, assigns weights to each attribute depending on its importance and ranks vendors accordingly. Subsequently, an algorithm is used to select the optimum set from these suppliers. The paper describes the steps of the developed approach and also provides a numerical example illustrating its application.supply chain management; vendor selection; performance measurement