Supplier Selection Under Conditions of Uncertainty

Abstract

Supplier selection is one of the critical decision-making problems in supply chain management. The purpose of this research is to investigate the process that is commonly used for calculating a “score” for each supplier when certain attributes are used. In decision making theory, the selection of “best” alternative can be done under three different conditions: certainty, risk, and uncertainty. Most of the current research uses “certainty” conditions. This article suggests that the “uncertainty” condition should be used in supplier selection as it corresponds to real-life more than the certainty or risk condition. “Maximum entropy” method is used to ascertain the probability function of the outcomes. Once the probability functions are known, means and variance can be calculated, and the suppliers can be evaluated.