An effective method to supplier selection and order quantity allocation

For many companies, the supplier selection decision is considered a complicated problem given its large-scale nature. For this matter, we present a two-step approach to effectively undertake this problem. First, a list of potential suppliers is ranked and reduced to a manageable number based on Analytical Hierarchy Process in which both quantitative and qualitative criteria are considered. Then, based on the reduced list of suppliers, a mixed integer non-linear programming model is presented to properly allocate orders while taking into account the annual ordering, holding and purchasing costs subject to supplier's capacity and quality constraints.