Current Issue

SUPPLIER SELECTION FOR VENDOR MANAGED INVENTORY: AN INTEGRATED FUZZY DECISION APPROACH

Nai-Chieh Wei

Department of Industrial Management, I-Shou University, Kaohsiung, Taiwan

Hao-Tien Liu*

Department of Industrial Management, I-Shou University, Kaohsiung, Taiwan

*Corresponding E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Hsiow-Ling Hsieh

Department of Business Administration, I-Shou University, Kaohsiung, Taiwan

Tzu-Jou Liao

Department of Industrial Management, I-Shou University, Kaohsiung, Taiwan

Peitsang Wu

Department of International Business Administration, I-Shou University, Kaohsiung, Taiwan

Abstract

Vendor Managed Inventory (VMI) is a useful inventory management strategy, allowing a vendor (supplier) to access its retailer’s inventory level. Effective selection of appropriate VMI suppliers can enhance supply chain integration and inventory control capability, reduce inventory cost, and improve customer service level. This research develops a systematic VMI supplier selection approach from VMI functional analysis, supplier evaluation factor construction, to optimal VMI supplier selection. The proposed method first uses the value engineering and fuzzy Analytic Hierarchy Process (AHP) to obtain weights of VMI primary and secondary functions. Fuzzy quality function deployment (QFD) approach is then used to derive weights of evaluation factors. Finally, a fuzzy multiple-criteria decision-making (MCDM) is designed to select the best VMI supplier. An electronic original-equipment manufacturer (OEM) company in southern Taiwan is employed to evaluate the applicability of the proposed approach. The results validate that the proposed method can serve as an effective tool for selecting VMI supplier.

Key words: vendor managed inventory, supplier selection, value engineering, Fuzzy AHP, fuzzy QFD, fuzzy MCDM