Modeling synergies in multi-criteria supplier selection and order allocation: An application to commodity trading

• A meta-approach is proposed for collaborative multi-criteria supplier selection and order allocation.
• The model incorporates both heterogeneous objective data and subjective judgments.
• The model considers synergistic effects within a hierarchical decision structure.
• The suppliers’ strategic performance indicators are monitored in the proposed model.
• The applicability of the model is demonstrated in commodity trading.

We propose a novel meta-approach to support collaborative multi-objective supplier selection and order allocation (SSOA) decisions by integrating multi-criteria decision analysis and linear programming (LP). The proposed model accounts for suppliers’ performance synergy effects within a hierarchical decision structure. It incorporates both heterogeneous objective data and subjective judgments of the decision makers (DMs) representing various groups with different voting powers (VPs). We maximize the total value of purchasing (TVP) by optimizing order quantity assignment to suppliers and taking into consideration their synergies encountered in different time horizons. We apply the proposed model to a contractor selection and order quantity assignment problem in an agricultural commodity trading (ACT) company. We maximize the strategic effectiveness of both the customers and the suppliers, minimize risks, increase the degree of cooperation between trading partners on all levels of supply chain integration, enhance transparent knowledge sharing and aggregation, and support collaborative decision making.