A robust optimisation approach to the problem of supplier selection and allocation in outsourcing

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

7 Scopus Citations
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Author(s)

  • Yelin Fu
  • Kin Keung Lai
  • Liang Liang

Related Research Unit(s)

Detail(s)

Original languageEnglish
Pages (from-to)913-918
Journal / PublicationInternational Journal of Systems Science
Volume47
Issue number4
Online published16 Apr 2014
Publication statusPublished - 2016

Abstract

We formulate the supplier selection and allocation problem in outsourcing under an uncertain environment as a stochastic programming problem. Both the decision-maker's attitude towards risk and the penalty parameters for demand deviation are considered in the objective function. A service level agreement, upper bound for each selected supplier's allocation and the number of selected suppliers are considered as constraints. A novel robust optimisation approach is employed to solve this problem under different economic situations. Illustrative examples are presented with managerial implications highlighted to support decision-making.

Research Area(s)

  • outsourcing, robust optimization, stochastic programming, supplier selection and allocation