Supplier Selection and Order Allocation in A Pharmaceutical Wholesaler
DOI:
https://doi.org/10.9744/jti.27.1.137-150Keywords:
Supplier Selection, Order Allocation, BWM, TOPSIS, MOLPAbstract
Supplier selection is essential for any organization , as it plays a significant role in enhancing productivity. This study focuses on a local pharmaceutical wholesaler (PW) company, which places orders with other local PWs to meet its demand. Typically, pharmaceutical companies rely on multiple suppliers to satisfy their needs. However, due to an inadequate evaluation of supplier criteria, a Multi-Criteria Decision Making (MCDM) approach has been implemented to assist the PW in selecting superior suppliers and ensuring an efficient selection process. A key issue in this case study is the lack of a structured method for assessing supplier criteria, resulting in a subjective and lengthy selection process. The criteria for supplier selection encompass quality, flexibility, price, delivery, service, and supplier profile. Furthermore, alongside supplier selection, optimizing order allocation is essential for reducing purchasing costs while maximizing supplier scores. This research proposes a model designed to aid PW in addressing both supplier selection and order allocation challenges. The MCDM framework commences with the Best Worst Method (BWM) to establish the weight of each criterion. These weights then serve as input for the Technique for Order of Preference by Similarity to Ideal Solution (TOPSIS), which ranks and prioritizes suppliers based on their evaluation scores. Subsequently, the results from TOPSIS inform the determination of optimal order allocation through a Multi-Objective Optimization (MOO) method. As part of the system modeling, a sensitivity analysis was performed to explore the effects of specific parameters on the objective function and decision variables, assessing variations in inventory costs, shortage costs, and demand. The findings indicated that only the demand parameter had a significant effect on decision variables, particularly regarding inventory levels and shortages. This research offers a comprehensive solution for the PW to tackle supplier selection and optimal order allocation. By employing MCDM and multi-objective optimization strategies, the company can achieve lower purchasing costs while selecting optimal suppliers based on their evaluation scores. The optimization model presented has dual objective functions: minimizing costs and maximizing total supplier value. Consequently, the model achieved a total purchasing cost of Rp. 340,196,740 and a total supplier value of 5,265,032.
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