Supplier selection using activity‐based costing and fuzzy present‐worth techniques

Abstract

The relationship between a supplier and a purchaser is one of the most essential issues for viability of both sides. The well‐built relationship is especially related to the healthy selection of suppliers. The changing customer preferences also make this selection process important. Many different selection approaches have been published in the purchasing literature. In these studies, the working conditions of suppliers and purchasers and selection criteria are considered constant and precise at the beginning of the selection process by the purchaser during the relationship period. However, this selection process should be considered dynamically because of the changing working conditions of supplier‐purchaser and lifecycle of the product or a project. Therefore, the relationship between suppliers and purchasers is multi‐period and the factors that affect the selection process are considered as fuzzy parameters in this study. The activity‐based costing (ABC) approach is used for selection method.