Vendor selection and evaluation: An activity based costing approach

Vendor selection and evaluation: An activity based costing approach

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Article ID: iaor19991218
Country: Netherlands
Volume: 96
Issue: 1
Start Page Number: 97
End Page Number: 102
Publication Date: Jan 1997
Journal: European Journal of Operational Research
Authors: ,
Keywords: activity costing, vendor selection
Abstract:

In this paper we propose an Activity Based Costing approach for vendor selection and evaluation. This system allows us to compute total costs caused by a supplier in a firm's production process, thereby increasing the objectivity in the selection process. We further show that for vendor evaluation purposes the difference between the budgeted and actual total vendor score can be decomposed in a purchaser effect, a supplier effect and a combined effect. We illustrate the Activity Based Costing approach with a case study.

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