Developing a chance‐constrained free replicability hull model for supplier selection

Developing a chance‐constrained free replicability hull model for supplier selection

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Article ID: iaor20124946
Volume: 12
Issue: 4
Start Page Number: 375
End Page Number: 394
Publication Date: Aug 2012
Journal: International Journal of Logistics Systems and Management
Authors: ,
Keywords: decision, statistics: data envelopment analysis, stochastic processes, programming: quadratic
Abstract:

Selecting appropriate suppliers has strategic significance for every company. The Free Replicability Hull (FRH) model is one of the models in Data Envelopment Analysis (DEA). In many real world applications, data are often stochastic. A successful approach to address uncertainty in data is to replace deterministic data via random variables, leading to chance‐constrained DEA. In this paper, a Chance‐Constrained FRH (CCFRH) model is developed; its deterministic equivalent, which is a nonlinear program, is also derived. Furthermore, it is shown that the deterministic equivalent of the CCFRH model can be converted into a quadratic program. In addition, sensitivity analysis of the CCFRH model is discussed with respect to changes in parameters. Finally, a numerical example demonstrates the application of the proposed model.

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