International supplier selection and order allocation decision: a comparison of a Turkish and an Australian company

Abstract

International supplier development is a multi-criterion decision problem which includes qualitative and quantitative factors. In the literature, it is seen that although there are abundant studies on various domestic supplier selection, the impacts of globalization on the level of sourcing and international supplier selection are not adequately discussed. This study seeks to provide a better understanding about international sourcing through an integrated approach to supplier selection and order allocation. By extending the literature and incorporating country-specific as well as supplierspecific factors into the selection decision, it is aimed to contribute to the supply chain development of internationally sourcing companies. Through the analytical hierarchy process (AHP), in consideration of both tangible and intangible criteria, a set of candidate suppliers are identified. A linear programming (LP) model with an objective of maximizing the total value of purchasing and a set of constraints, is then formulated and solved to allocate the optimal order quantities among the candidate suppliers. This study also aims to benchmark the importance given to the selection criteria by the companies in different countries. The hybrid model is applied to both a Turkish chemical company and an Australian chemical company and the differences in selection methods are indicated. Although the results may not be generalized, they can be a reflection of the differences between two cultures and the challenging trends in international trade. This might also form a basis for similar studies in the future.