A comprehensive multi-stage decision-making model for supplier selection and order allocation approach in the digital economy

Abstract

The increasingly serious environmental issues and fierce competition caused by globalization have brought pressure on supply chain managers who seek to allocate multiple purchase demands comprehensively, highlighting the significance of supplier assessment considering sustainability and technique. Moreover, many multi-criteria decision-making (MCDM) methods fail to quantify the risk preference of decision-makers (DMs) when conducting the supplier assessment process. Indeed, a hybrid supplier selection and order allocation model that integrates such requirements is yet to be proposed. Thus, this work develops a comprehensive decision-making model that constructs a deep learning model to forecast the potential demand and addresses the sustainable supplier selection based on cumulative prospect theory (CPT) and multi-material order allocation problem simultaneously. The proposed order allocation model is solved by the second generation of adaptive geometry estimation based many-objective evolutionary algorithm, with the technique of order preference similarity to the ideal solution used to filter out the best Pareto solution for DMs as the reference. Through implementing an illustrative case study of a leading Chinese engineering machinery manufacturer followed by a sensitivity analysis, the relatively strong applicability and scalability of the proposed model and methods are demonstrated. The results show that introducing Weibull distribution to estimate the theoretical obsolescence rate of historically sold accessories can result in higher demand prediction accuracy for consumable mechanical accessories. Integrating CPT into the MCDM framework allows us to evaluate suppliers more comprehensively by capturing the effect of DMs’ risk preferences and gain or loss sensitivity.