Supply portfolio is one of the strategies that can mitigate the impacts of supply disruptions. In making a supply portfolio, evaluating and selecting suppliers is a crucial step. Existing methods of supplier selection focus mainly on the attributes of suppliers, while the human effects of buyers and changes in external demand are seldom or never considered in the literature. To address these issues, this paper proposes the incorporation of the utility function in the simple multi-attribute rating technique to account for buyers' risk-taking behavior and investigate supplier selection decisions under different scenarios of market demand. The proposed approach aims to help decision-makers evaluate their supplier options and select the suppliers that will give the maximum utility. As a case study, the proposed approach is applied to the supplier selection problem faced by a large semiconductor assembly and testing company under different demand scenarios. The results show that our approach is able to determine the most appropriate suppliers for the company for different risk-taking behavior and under different demand scenarios.
- Multi-criterion decision-making
- Supplier selection
- Utility theory