Outsourcing Supplier Selection Using Interval 2-Tuple Linguistic VIKOR Method

Abstract:

It is common that outsourcing strategy causes risks like increase in indirect costs, information asymmetry, and reduction of control. In order to take the advantages of outsourcing strategy and reduce potential risks, supplier selection process plays an important role among each step of the supply chain management. Based on literature review, supplier selection criteria were divided into four categories, namely service quality, price and cost, communication and coordination, and R&D and innovation. And the alternative suppliers evaluation were ranked by using an extended VIKOR (VIseKriterijumska Optimizacija I Kompromisno Resenje) method with interval 2-tuple linguistic information. An empirical case study was provided to show the feasibility and practicability of the proposed interval 2-tuple linguistic VIKOR (ITL-VIKOR) method, including comparison with other three commonly used approaches. Results show that the proposed approach is able to handle several data processing problems like information distortion, ranking results repetition, analyzing quantitative and qualitative data at the same time, involving subjective and objective weight, as well as considering preference from decision makers.

Key words:outsourcing; supplier selection; VIseKriterijumska Optimizacija I Kompromisno Resenje (VIKOR); interval 2-tuples; multi-criteria decision making (MCDM)