American Institute of Mathematical Sciences

Advanced
October  2011, 7(4): 907-925. doi: 10.3934/jimo.2011.7.907

An integrated approach for selection of service vendors in service supply chain

Fei Cheng 1, , Shanlin Yang 1, , Ram Akella 2, and  Xiaoting Tang 3,

1. 

School of Management, Hefei University of Technology, Hefei, Anhui 230009, China, China
2. 

Jack Baskin School of Engineering, University of California, Santa Cruz, CA 94043, United States
3. 

School of Management, University of Science and Technology of China, Hefei, Anhui 230026, China

Received  October 2010 Revised  June 2011 Published  August 2011

We explore the basic conceptual framework to imagine service supply chain that is a new research concern in supply chain management, and develop an integrated approach to optimize the selection of service vendors. Three insights arise on how service vendors can be obtained: (1) exploring multiple criteria decision-making problems with incomplete weight information; (2) identifying and eliminating criteria by information entropy method; (3) analyzing and calculating the final selection of qualified service vendors through a combining way between the fuzzy analytic hierarchy process and the multi-objective linear programming approach. Finally, an experiment implemented highlights effectiveness of the integrated approach.
Keywords: Service vendor, Fuzzy analytic hierarchy process, Multi-object linear programming., Information entropy, Service supply chain.
Mathematics Subject Classification: Primary: 58F15, 58F17; Secondary: 53C3.
Citation: Fei Cheng, Shanlin Yang, Ram Akella, Xiaoting Tang. An integrated approach for selection of service vendors in service supply chain. Journal of Industrial & Management Optimization, 2011, 7 (4) : 907-925. doi: 10.3934/jimo.2011.7.907
References:
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G. Allon and A. Federgruen, Competition in service industries with segmented markets, Management Science, 55 (2003), 619-634. doi: 10.1287/mnsc.1080.0946.  Google Scholar

[2]

S. H. Amin, J. Razmi and G. Zhang, Supplier selection and order allocation based on fuzzy SWOT analysis and fuzzy linear programming,, Expert Systems with Applications, ().   Google Scholar

[3]

E. G. Anderson and D. J. Morrice, A simulation game for service-oriented supply chain management, Production and Operations Management, (2000), 40-45. Google Scholar

[4]

L. Berry, V. Shankar and J. Parish, Creating new markets through service innovation, MIT Sloan Management Review, 47 (2006), 56-63. Google Scholar

[5]

N. Bhuiyan, E. Shuiabi and V. Thomson, Entropy as a measure of operational flexibility, European Journal of Operational Research, 165 (2005), 696-707.  Google Scholar

[6]

O. Cakir, On the order of the preference intensities in fuzzy AHP, Computers and Industrial Engineering, 54 (2008), 993-1005. doi: 10.1016/j.cie.2007.11.010.  Google Scholar

[7]

X. Chao, L. Liu and S. Zheng, Resource allocation in multisite service systems with interstice customer flows, Management Science, 49 (2003), 1739-1752. Google Scholar

[8]

R. B. Chase, The mall is my factory: Lessons from a service junkie, Production and Operation Management, 5 (1996), 298-308. doi: 10.1111/j.1937-5956.1996.tb00402.x.  Google Scholar

[9]

S. S. Chauhdry, F. G. Forst and J. L. Zydiak, Vendor selection with price breaks, European Journal of Operational Research, 70 (1993), 52-66. doi: 10.1016/0377-2217(93)90232-C.  Google Scholar

[10]

I. J. Chen and A. Paulraj, Understanding supply chain management: Critical research and a theoretical framework, International Journal of Production Research, 42 (2004), 131-163. Google Scholar

[11]

L. H. Chen and H. W. Lu, An approximate approach for ranking fuzzy numbers based on left and right dominance, An International Journal of Computers and Mathematics with Applications, 41 (2001), 1589-1602. Google Scholar

[12]

C. H. Cheng, Evaluating naval tactical missile systems by fuzzy AHP based on the grade value of membership function, European Journal of Operational Research, 96 (1996), 343-350. Google Scholar

[13]

S. J. Cook, Kathy DeBree and Amie Feroleto, From raw materials to customers: Supply chain management in the service industry, SAM Advanced Management Journal, 66 (2002), 14-19. Google Scholar

[14]

K. L. Croxton, S. J. Garcia-Dastugue, D. M. Lambert and D. L. Rogers, The supply chain management process, International Journal of Logistics Management, 12 (2001), 13-36. Google Scholar

[15]

Z. Dagraeve and F. Roodhooft, A mathematical programming approach for procurement using activity based costing, Journal of Business Finance and Accounting, 27 (2000), 69-98. Google Scholar

[16]

H. Dernirkan and H. K. Cheng, The risk and information sharing of application services supply chain, European Journal of Operational Research, 187 (2008), 765-784. Google Scholar

[17]

D. de Waart and S. Kemper, 5 steps to service supply chain excellence, Supply Chain Management Review, 8 (2004), 28-35. Google Scholar

[18]

L. M. Ellram, W. L. Tate and C. Billington, Understanding and managing the service supply chain, Journal of Supply Chain Management, (2004), 17-32. Google Scholar

[19]

J. R. Figueira, A. Liefooghe, E. G. Talbi and A. P. Wierzbicki, A parallel multiple reference point approach for multi-objective optimization, European Journal of Operational Research, 205 (2010), 390-400. Google Scholar

[20]

G. Friezlle and J. Efstathiou, "Seminar Notes on 'Measuring Complex Systems,'" London School of Economics, 2002. Google Scholar

[21]

G. Galante, G. Aiello, M. Enea and E. Panascia, A parallel multiple reference point approach for multi-objective optimization, Waste Management, 30 (2010), 1720-1728. Google Scholar

[22]

M. X. He and P. E. Ricci, Information entropy of orthogonal polynomials, Orthogonal Systems and Applications, Applied Mathematics and Computation, 128 (2002), 261-274. doi: 10.1016/S0096-3003(01)00075-3.  Google Scholar

[23]

S. Jharkharia and R. Shank, Selection of logistics service provider: An analytic network process (ANP) approach, International Journal of Management Science, 35 (2007), 274-289. Google Scholar

[24]

R. Johnston, Service operations management: Return to roots, International Journal of Operations and Production Management, 19 (1999), 104-124. doi: 10.1108/01443579910247383.  Google Scholar

[25]

H. Y. Kang and A. H. I. Lee, Priority mix planning for semiconductor fabrication by fuzzy AHP ranking, Expert Systems with Applications, 32 (2007), 560-570. Google Scholar

[26]

A. Kaufmann and M. M. Gupta, "Introduction to Fuzzy Arithmetic," Theory and Applications, Van Nostrand Reinhold Co., New York, 1991.  Google Scholar

[27]

M. Kumar, P. Vart and P. Shankar, A fuzzy goal programming approach for supplier selection problem in a supply chain, Computer and Industrial Engineering, 46 (2004), 69-85. Google Scholar

[28]

S. Lai, G. Mayer-Kress, J. J. Sosnoff and K. M. Newell, Information entropy analysis of discrete aiming movements, Acta Psychological, 119 (2005), 283-304. Google Scholar

[29]

H. Lee and C. Billington, The evolution of supply-chain management models and practice at Hewlett-Packard, Interfaces, 25 (1995), 42-63. Google Scholar

[30]

D. Li, Linear programming method for MADM with interval-valued intuitionist fuzzy sets, Expert Systems with Applications, 37 (2010), 5939-5945. doi: 10.1016/j.eswa.2010.02.011.  Google Scholar

[31]

A. Ojha, B. Das, S. Mondal and M. Maiti, A stochastic discounted multi-objective solid transportation problem for breakable items using analytical hierarchy process, Applied Mathematical Modeling, 34 (2010), 2256-2271. Google Scholar

[32]

L. Peng, Z. Tong and Q. Li, "An Analysis of the Third Party Payment System Based on Service Supply Chain," IEEE IRI 2009, Las Vegas, Nevada, USA, 2009. Google Scholar

[33]

P. J. M. van Laarhoven and W. Pedrycz, A fuzzy extension of Saaty's priority theory, Fuzzy Sets and Systems, 11 (1983), 229-241.  Google Scholar

[34]

H. Rommelfanger, Interactive decision making in fuzzy linear optimization problems, European Journal of Operational Research, 41 (1989), 210-217. doi: 10.1016/0377-2217(89)90386-X.  Google Scholar

[35]

E. C. Rosenthal and J. L. Zydiac, Vendor selection with bundling, Decision Sciences, 26 (1995), 35-48. doi: 10.1111/j.1540-5915.1995.tb00836.x.  Google Scholar

[36]

A. V. Roth and L. J. Menor, Insights into service operations management: A research agenda, Production and Operations Management, 12 (2003), 145-164. doi: 10.1111/j.1937-5956.2003.tb00498.x.  Google Scholar

[37]

T. L. Saaty, A scaling method for priorities in hierarchical structures, Journal of Mathematical Psychology, 42 (1977), 241-266.  Google Scholar

[38]

T. L. Saaty, Response to holder's comments on the Analytic Hierarchy Process, Journal of the Operational Research Society, 42 (1991), 909-914. Google Scholar

[39]

T. L. Saaty, "Multi-Criteria Decision Making: The Analytic Hierarchy Process," 2nd edition, RSW Pub. Pittsburgh, New York, 1990. Google Scholar

[40]

M. Saleh, Estimating market shares in each market segment using the information entropy concept, Applied Mathematics and Computation, 190 (2007), 1735-1739. Google Scholar

[41]

C. E. Shannon, A Mathematical Theory of Communication, The Bell System Technical Journal, 27 (1948), 379-423, 623-656.  Google Scholar

[42]

N. Slack, M. Lewis and H. Bates, The two worlds of operations research and practice: Can They meet, should they meet?, International Journal of Operations and Production Management, 24 (2004), 374-387. Google Scholar

[43]

J. Spohrer, L. C. Anderson, N. J. Pass, T. Ager and D. Gruhl, Service science, Journal of Grid Computing, 6 (2008), 313-324. doi: 10.1007/s10723-007-9096-2.  Google Scholar

[44]

G. Wang, S. H. Hang and J. P. Dismukes, Product-driven supply chain selection using integrated multi-criteria decision making methodology, International Journal of Production Economics, 91 (2004), 1-15. Google Scholar

[45]

T. C. Wang and Y. H. Chen, Applying fuzzy linguistic preference relations to the improvement of consistency of fuzzy AHP, Fuzzy Sets and Systems, 178 (2008), 3755-3765. Google Scholar

[46]

C. A. Weber and J. R. Current, A multi-objective approach to provider selection, European Journal of Operational Research, 68 (2003), 173-184. doi: 10.1016/0377-2217(93)90301-3.  Google Scholar

[47]

G. Vaidyanathan, A framework for evaluating third-party logistics, Communications of the ACM, 48 (2005), 89-94. doi: 10.1145/1039539.1039544.  Google Scholar

[48]

S. L. Vargo and R. F. Lusch, The four service marketing myths: Remnants of a goods-based, manufacturing model, Journal of Service Research, 6 (2004), 324-335. Google Scholar

[49]

L. Vidal, E. Sahin, N. Martelli, M. Berhoune and B. Bonan, Applying AHP to select drugs to be produced by anticipation in a chemotherapy compounding unit,, Expert System with Application, ().   Google Scholar

show all references

References:
[1]

G. Allon and A. Federgruen, Competition in service industries with segmented markets, Management Science, 55 (2003), 619-634. doi: 10.1287/mnsc.1080.0946.  Google Scholar

[2]

S. H. Amin, J. Razmi and G. Zhang, Supplier selection and order allocation based on fuzzy SWOT analysis and fuzzy linear programming,, Expert Systems with Applications, ().   Google Scholar

[3]

E. G. Anderson and D. J. Morrice, A simulation game for service-oriented supply chain management, Production and Operations Management, (2000), 40-45. Google Scholar

[4]

L. Berry, V. Shankar and J. Parish, Creating new markets through service innovation, MIT Sloan Management Review, 47 (2006), 56-63. Google Scholar

[5]

N. Bhuiyan, E. Shuiabi and V. Thomson, Entropy as a measure of operational flexibility, European Journal of Operational Research, 165 (2005), 696-707.  Google Scholar

[6]

O. Cakir, On the order of the preference intensities in fuzzy AHP, Computers and Industrial Engineering, 54 (2008), 993-1005. doi: 10.1016/j.cie.2007.11.010.  Google Scholar

[7]

X. Chao, L. Liu and S. Zheng, Resource allocation in multisite service systems with interstice customer flows, Management Science, 49 (2003), 1739-1752. Google Scholar

[8]

R. B. Chase, The mall is my factory: Lessons from a service junkie, Production and Operation Management, 5 (1996), 298-308. doi: 10.1111/j.1937-5956.1996.tb00402.x.  Google Scholar

[9]

S. S. Chauhdry, F. G. Forst and J. L. Zydiak, Vendor selection with price breaks, European Journal of Operational Research, 70 (1993), 52-66. doi: 10.1016/0377-2217(93)90232-C.  Google Scholar

[10]

I. J. Chen and A. Paulraj, Understanding supply chain management: Critical research and a theoretical framework, International Journal of Production Research, 42 (2004), 131-163. Google Scholar

[11]

L. H. Chen and H. W. Lu, An approximate approach for ranking fuzzy numbers based on left and right dominance, An International Journal of Computers and Mathematics with Applications, 41 (2001), 1589-1602. Google Scholar

[12]

C. H. Cheng, Evaluating naval tactical missile systems by fuzzy AHP based on the grade value of membership function, European Journal of Operational Research, 96 (1996), 343-350. Google Scholar

[13]

S. J. Cook, Kathy DeBree and Amie Feroleto, From raw materials to customers: Supply chain management in the service industry, SAM Advanced Management Journal, 66 (2002), 14-19. Google Scholar

[14]

K. L. Croxton, S. J. Garcia-Dastugue, D. M. Lambert and D. L. Rogers, The supply chain management process, International Journal of Logistics Management, 12 (2001), 13-36. Google Scholar

[15]

Z. Dagraeve and F. Roodhooft, A mathematical programming approach for procurement using activity based costing, Journal of Business Finance and Accounting, 27 (2000), 69-98. Google Scholar

[16]

H. Dernirkan and H. K. Cheng, The risk and information sharing of application services supply chain, European Journal of Operational Research, 187 (2008), 765-784. Google Scholar

[17]

D. de Waart and S. Kemper, 5 steps to service supply chain excellence, Supply Chain Management Review, 8 (2004), 28-35. Google Scholar

[18]

L. M. Ellram, W. L. Tate and C. Billington, Understanding and managing the service supply chain, Journal of Supply Chain Management, (2004), 17-32. Google Scholar

[19]

J. R. Figueira, A. Liefooghe, E. G. Talbi and A. P. Wierzbicki, A parallel multiple reference point approach for multi-objective optimization, European Journal of Operational Research, 205 (2010), 390-400. Google Scholar

[20]

G. Friezlle and J. Efstathiou, "Seminar Notes on 'Measuring Complex Systems,'" London School of Economics, 2002. Google Scholar

[21]

G. Galante, G. Aiello, M. Enea and E. Panascia, A parallel multiple reference point approach for multi-objective optimization, Waste Management, 30 (2010), 1720-1728. Google Scholar

[22]

M. X. He and P. E. Ricci, Information entropy of orthogonal polynomials, Orthogonal Systems and Applications, Applied Mathematics and Computation, 128 (2002), 261-274. doi: 10.1016/S0096-3003(01)00075-3.  Google Scholar

[23]

S. Jharkharia and R. Shank, Selection of logistics service provider: An analytic network process (ANP) approach, International Journal of Management Science, 35 (2007), 274-289. Google Scholar

[24]

R. Johnston, Service operations management: Return to roots, International Journal of Operations and Production Management, 19 (1999), 104-124. doi: 10.1108/01443579910247383.  Google Scholar

[25]

H. Y. Kang and A. H. I. Lee, Priority mix planning for semiconductor fabrication by fuzzy AHP ranking, Expert Systems with Applications, 32 (2007), 560-570. Google Scholar

[26]

A. Kaufmann and M. M. Gupta, "Introduction to Fuzzy Arithmetic," Theory and Applications, Van Nostrand Reinhold Co., New York, 1991.  Google Scholar

[27]

M. Kumar, P. Vart and P. Shankar, A fuzzy goal programming approach for supplier selection problem in a supply chain, Computer and Industrial Engineering, 46 (2004), 69-85. Google Scholar

[28]

S. Lai, G. Mayer-Kress, J. J. Sosnoff and K. M. Newell, Information entropy analysis of discrete aiming movements, Acta Psychological, 119 (2005), 283-304. Google Scholar

[29]

H. Lee and C. Billington, The evolution of supply-chain management models and practice at Hewlett-Packard, Interfaces, 25 (1995), 42-63. Google Scholar

[30]

D. Li, Linear programming method for MADM with interval-valued intuitionist fuzzy sets, Expert Systems with Applications, 37 (2010), 5939-5945. doi: 10.1016/j.eswa.2010.02.011.  Google Scholar

[31]

A. Ojha, B. Das, S. Mondal and M. Maiti, A stochastic discounted multi-objective solid transportation problem for breakable items using analytical hierarchy process, Applied Mathematical Modeling, 34 (2010), 2256-2271. Google Scholar

[32]

L. Peng, Z. Tong and Q. Li, "An Analysis of the Third Party Payment System Based on Service Supply Chain," IEEE IRI 2009, Las Vegas, Nevada, USA, 2009. Google Scholar

[33]

P. J. M. van Laarhoven and W. Pedrycz, A fuzzy extension of Saaty's priority theory, Fuzzy Sets and Systems, 11 (1983), 229-241.  Google Scholar

[34]

H. Rommelfanger, Interactive decision making in fuzzy linear optimization problems, European Journal of Operational Research, 41 (1989), 210-217. doi: 10.1016/0377-2217(89)90386-X.  Google Scholar

[35]

E. C. Rosenthal and J. L. Zydiac, Vendor selection with bundling, Decision Sciences, 26 (1995), 35-48. doi: 10.1111/j.1540-5915.1995.tb00836.x.  Google Scholar

[36]

A. V. Roth and L. J. Menor, Insights into service operations management: A research agenda, Production and Operations Management, 12 (2003), 145-164. doi: 10.1111/j.1937-5956.2003.tb00498.x.  Google Scholar

[37]

T. L. Saaty, A scaling method for priorities in hierarchical structures, Journal of Mathematical Psychology, 42 (1977), 241-266.  Google Scholar

[38]

T. L. Saaty, Response to holder's comments on the Analytic Hierarchy Process, Journal of the Operational Research Society, 42 (1991), 909-914. Google Scholar

[39]

T. L. Saaty, "Multi-Criteria Decision Making: The Analytic Hierarchy Process," 2nd edition, RSW Pub. Pittsburgh, New York, 1990. Google Scholar

[40]

M. Saleh, Estimating market shares in each market segment using the information entropy concept, Applied Mathematics and Computation, 190 (2007), 1735-1739. Google Scholar

[41]

C. E. Shannon, A Mathematical Theory of Communication, The Bell System Technical Journal, 27 (1948), 379-423, 623-656.  Google Scholar

[42]

N. Slack, M. Lewis and H. Bates, The two worlds of operations research and practice: Can They meet, should they meet?, International Journal of Operations and Production Management, 24 (2004), 374-387. Google Scholar

[43]

J. Spohrer, L. C. Anderson, N. J. Pass, T. Ager and D. Gruhl, Service science, Journal of Grid Computing, 6 (2008), 313-324. doi: 10.1007/s10723-007-9096-2.  Google Scholar

[44]

G. Wang, S. H. Hang and J. P. Dismukes, Product-driven supply chain selection using integrated multi-criteria decision making methodology, International Journal of Production Economics, 91 (2004), 1-15. Google Scholar

[45]

T. C. Wang and Y. H. Chen, Applying fuzzy linguistic preference relations to the improvement of consistency of fuzzy AHP, Fuzzy Sets and Systems, 178 (2008), 3755-3765. Google Scholar

[46]

C. A. Weber and J. R. Current, A multi-objective approach to provider selection, European Journal of Operational Research, 68 (2003), 173-184. doi: 10.1016/0377-2217(93)90301-3.  Google Scholar

[47]

G. Vaidyanathan, A framework for evaluating third-party logistics, Communications of the ACM, 48 (2005), 89-94. doi: 10.1145/1039539.1039544.  Google Scholar

[48]

S. L. Vargo and R. F. Lusch, The four service marketing myths: Remnants of a goods-based, manufacturing model, Journal of Service Research, 6 (2004), 324-335. Google Scholar

[49]

L. Vidal, E. Sahin, N. Martelli, M. Berhoune and B. Bonan, Applying AHP to select drugs to be produced by anticipation in a chemotherapy compounding unit,, Expert System with Application, ().   Google Scholar

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