Considering Product Life Cycle Cost Purchasing Strategy for Solving Vendor Selection Problems

Chien-Wen Shen; Yen-Ting Peng; Chang-Shu Tu

Working Paper Article Version 1 This version is not peer-reviewed

Version 1 : Received: 30 May 2019 / Approved: 3 June 2019 / Online: 3 June 2019 (09:52:41 CEST)

The framework of product life cycle (PLC) cost analysis is one of the most important evaluation tools for a contemporary high-tech company in an increasingly competitive market environment. The PLC-purchasing strategy provides the framework for a procurement plan and examines the sourcing strategy of a firm. The marketing literature emphasizes that ongoing technological change and shortened life cycles are important elements in commercial organizations. From a strategic viewpoint, the vendor has an important position between supplier, buyer and manufacturer. The buyer seeks to procure the products from a set of vendors to take advantage of economies of scale and to exploit opportunities for strategic relationships. However, previous studies have seldom considered vendor selection (VS) based on PLC cost (VSPLCC) analysis. The purpose of this paper is to solve the VSPLCC problems considering the situation of a single-buyer-multiple-supplier. For this issue, a new VSPLCC procurement model and solution procedure are derived by this paper to minimize net cost, rejection rate, late delivery and PLC cost subject to vendor capacities and budget constraints. Moreover, a real case in Taiwan is provided to show how to solve the VSPLCC procurement problem.

vendor selection; product life cycle; multi-objective linear programming; Multi-choice goal programming.

SOCIAL SCIENCES, Business and Administrative Sciences

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Considering Product Life Cycle Cost Purchasing Strategy for Solving Vendor Selection Problems

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