Abstract

One of the main factors in competitive environment is to reduce production costs. Selecting the right suppliers significantly reduces the purchasing costs and improves corporate competitiveness. That is why the cost of raw materials and components part constitutes the main cost of a product and most of the firms have to spend considerable amount of their sales revenue on purchasing. The aim of this research is to introduce an integrated model for supplier’s selection and order allocation in an automotive company. Therefore, the research was divided into two phases (conceptual modeling and mathematical modeling) with four steps. In conceptual modeling, in order to select the best suppliers, an integrated, Analytic Hierarchy Procees and Technique for Order Preference by Similarity to Ideal Solution  (AHP-TOPSIS) approach was used. Hence, after library studies and interview with experts, managers and specialists in the supply chain management field, decision criteria were identified through brain storming which contains the main criteria and sub criteria of the selection process for suppliers. Then in mathematical modeling in order to allocate every selected supplier in conceptual modeling, a Multi-Objective Linear Programming (MOLP)  model was used. As such, the objectives and subjectives of suppliers and the Automotive Company were identified. Results show that applying a two phase AHP-TOPSIS methodology aided the selection of the best suppliers. Also Automotive Company’s total costs were minimized with using a MOLP model.

Key words: Supply chain, analytical hierarchy process, supplier evaluation, technique for order preference by similarity to ideal solution  (TOPSIS), multi-objective linear programming (MOLP).