A MCDM-based model for vendor selection: a case study in the particleboard industry

We investigated procurement of raw materials for particleboard to minimize costs and develop an efficient optimization model for product mix. In a multiple-vendor market, vendors must be evaluated based on specified criteria. Assuming sourcing from the highest-scoring vendors, annual purchase quantities are then planned. To meet procurement needs, we first propose a model to describe the problem. Then, an appropriate multi-criteria decision making (MCDM) technique is selected to solve it. We ran the model using commercial software such as LINGO? and then compared the model results to a real case involving one of the largest particleboard manufacturers in the region. The model run based real data yielded a procurement program that is more efficient and lower in cost than the program currently in use. Use of this procurement modelling approach would yield considerable financial returns.