A stochastic decision model for strategic supplier relationship portfolio management

摘要

Management of a portfolio of strategic supplier relationships is complicated by their dynamism, uncertainty, information vagueness, significant profit impact, long-term orientation, substantial switching cost, and the interdependency among alternatives. To address this challenge, this paper first suggests a three-layer framework for strategic supplier relationship portfolio management. It then proposes a fuzzy binomial tree approximation-based stochastic model to analyse relationship dynamics and the value of a supplier relationship portfolio, taking into account both randomness and fuzziness uncertainty. Furthermore, it develops a decision model for supplier relationship portfolio configuration and adaptive development planning. Numerical examples are provided and some managerial implications are discussed.