Game Theoretic Strategies for Supplier Capability Assessment and Manufacturing Order Allocation

Abstract

With the globalization of supply chain management, organizations have to find ways to reduce costs through global sourcing, to increase their competitive advantage. Supplier evaluation or selection plays an important role in the manufacturing process, particularly when the available budget is restricted in manufacturer expenditures. Each enterprise might have its supplier selection criteria, and from these criteria devise their method of selection [1]. Each supply chain includes a number of manufacturers, with finite budgets, which need to be allocated to all suppliers in all parts of the manufacturing process. Some manufacturers are faced with budgetary limitations. Each manufacturer has multiple suppliers each of which in turn possesses different specific capabilities (such as delivery performance and cost of manufacturing). Supply Chain Management (SCM) is thus needed to perform a feasible allocation of suppliers during manufacturing process flows.