A Review of Optimization Techniques for Supplier Selection and Order Allocation

Abstract

Supply chain is an integrated process in which a group of several organizations, such as suppliers, producers, distributors, and retailers, work together, and where activities such as procurement, production, distribution and demand planning must be addressed. The selection of suppliers is one of the most crucial activities in supply chain management and is conditioned to factors such as lead time, responsiveness, and capacity. This chapter presents an overview of the state of art techniques regarding optimization of supply chain management focussed on the selection of suppliers and order allocation as well as optimization objectives and includes some practical applications. Apart from presenting some of the most common problem categories and optimization techniques, a comparison is provided suggesting the growing importance of heuristic and metaheuristic-based artificial intelligence techniques, given the increased complexity of supply chains and its non-deterministic nature.