Determination of the Optimal Number of Suppliers Considering the Risk: Emersun Company as a Case Study

Abstract

Determining the number of suppliers chosen for cooperation in a supply chain is one of the most important problems in the supply chain management area. Regarding the fact that simultaneously decreasing the risk and cost is one of the most important objectives of every organization, besides the cost, the risk has also been introduced in the recent researches, as one of the most important criteria. In this paper, the decision tree approach is used for determining the optimal number of suppliers considering the supply risk and it has been tried to develop an applied method through expanding the cost criteria. The proposed model in this paper, therefore, contains any kind of cost ingredients such as cost of suppliers development, cost of suppliers management, cost of missing discount in volume due to increase in number of suppliers in supply base, and loss cost due to supply postponement from suppliers. This approach is implemented in Emersun Company.

Integrated inventory management and supplier base reduction in a supply chain with multiple uncertainties

“…Lu et al (2011) considered the optimal sourcing policy in a supply chain with product substitution and dual sourcing under random supply failures. Mirahmadi, Saberi, and Teimoury (2012) used a decision tree approach to determine the optimal number of suppliers taking into account the supply risk and the associated costs (e.g. cost of supplier development, missing discount in volume, loss due to supply postponement).…”