Optimal selection of suppliers in a supply chain network with multiple bidders for each stage

Abstract

In a cost competitive commodity market, procurement of raw materials and production and supply of finished goods at minimum cost play vital roles in managing an efficient supply chain. It becomes complex while dealing with agricultural products, where procurement of raw material(s) is seasonal and production is partly seasonal whereas finished products demand is steady throughout the year. Further complications arise when changes come in the set of service providers (supply side & distribution side) & their commercial contracts, annually. This paper models such a supply chain as a project network in which multiple time-cost bids are provided by multiple suppliers for each stage/node of the network. Market intelligence curves are developed for each stage/activity to determine the baseline cost-time solution for the network. Optimal set of suppliers is determined using the market intelligence curves and suppliers’ actual bids by formulating the problem as a linear programming problem.