A novel method for supplier selection by two competitors, including multiple criteria

Author： Kermani Mehrdad Agha Mohammad Ali

ISSN： 1362-3052

Source： International Journal of Computer Integrated Manufacturing, Vol.25, Iss.6, 2012-06, pp. : 527-535

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Abstract

Nowadays, all market components are competing with each other. Supplier selection among different manufacturers is one of the most important aspects of competition among market participants. In this paper, we study a supplier selection taking into consideration three key criteria: price, quality and delivery performance. A game theory-based model is proposed for the problem in such a way that each buyer tries not only to optimise his/her own problem but also to remove the other buyers from their optimum points. We apply a combination of multi-criteria decision-making methods and an extension of the ordinal game theory to find the Nash equilibrium for selecting the right supplier in a competitive market. The success of this model will be supported by a numerical example.