Title: A stochastic decision model for strategic supplier relationship portfolio management

Authors: Zhanping Cheng; Andy A. Tsay; Xiaodong Yang

Addresses: BASF SE, Global Controlling, SpeyererStrasse 2, 67117 Limburgerhof, Germany ' Leavey School of Business, Santa Clara University, Santa Clara, CA 95053-0382, USA ' International Business School, Beijing Foreign Studies University, Beijing 100089, China

Abstract: Management of a portfolio of strategic supplier relationships is complicated by their dynamism, uncertainty, information vagueness, significant profit impact, long-term orientation, substantial switching cost, and the interdependency among alternatives. To address this challenge, this paper first suggests a three-layer framework for strategic supplier relationship portfolio management. It then proposes a fuzzy binomial tree approximation-based stochastic model to analyse relationship dynamics and the value of a supplier relationship portfolio, taking into account both randomness and fuzziness uncertainty. Furthermore, it develops a decision model for supplier relationship portfolio configuration and adaptive development planning. Numerical examples are provided and some managerial implications are discussed.

Keywords: supply chain management; SCM; fuzzy sets; stochastic modelling; supplier relationship management; portfolio management; fuzzy logic; strategic management; randomness; fuzziness; uncertainty; decision models.

DOI: 10.1504/IJAOM.2015.068303

International Journal of Advanced Operations Management, 2015 Vol.7 No.1, pp.1 - 21

Available online: 16 Mar 2015 *

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