The paper deals with the development of an integrated supplier selection and negotiation process for multiple parts/materials procurement. The main objective is to integrate decisions in the internal supply chain of a make-to-order manufacturer. Two main decisions during the negotiation process are considered:(1) the manufacturing planning decision responsible for determining the production schedule and fabrication lot size and (2) the supplier selection decision concerning which suppliers are selected for company business and the order volume allocated to each selected supplier. The model is designed to support the negotiation process by generating a set of effective alternatives in each negotiation period. Its structure is multi-objective and non-linear. The combination of the interactive weighted Tchebycheff method and Benders decomposition method is applied to generate a set of effective alternatives to support the decision-maker in each negotiation period. IntroductionThe business nature of the make-to-order (MTO) environment leads to procurement activity playing a significant role in determining a company's competitiveness. Unlike the assembly-to-order and make-to-stock environments, for MTO the procurement process is conducted after an order from a customer has been confirmed. Therefore, the material procurement lead time is taken into account when defining the total competitive lead time. Jahnukainen and Lahti (1999) also addressed the importance of an efficient purchasing process on the MTO supply chain by finding that purchased components account for 70-80% of the product cost in this business environment. Therefore, in this business the performance of a company depends on the performance of its suppliers.In the MTO procurement process, partner/supplier selection is often based on bidding and negotiation (Kingsman and Mercer 1997, Cakravastia andTakahashi 2003). For a comprehensive review of literature in the research on supplier selection, see De Boer et al. (2001). De Boer et al. extended a previous review by Weber et al. (1991), Holt (1998) and Degraeve et al. (2000). In the final choice phase, De Boer et al. explain that the approaches to model the supplier selection problem can be classified as rating/linear weighting model, total cost approaches model, mathematical programming model, statistical model and artificial intelligence-based model.

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