A New Optimization Method for Supplier Evaluation in the Context of Volume Discount

Managing the purchasing task in the supply chain has been a challenge in the last decade for many corporations. The need to gain a global competitive edge on the supply side has increased substantially. Particularly for companies who spend a high percentage of their sales revenue on parts and material supplies, and whose material costs represent a larger portion of total costs, savings from supplies are of particular importance. Moreover, the emphasis on quality and timely delivery in today’s globally competitive marketplace adds a new level of complexity to outsourcing and supplier selection decisions. These, strongly urge for a more systematic and transparent approach for supplier selection. Selecting the suppliers systematically reduces the purchasing cost and improves corporate competitiveness, which is why many experts believe that the supplier selection is the most important activity of a purchasing department (Farzipoor Saen, 2007). Supplier selection is the process by which suppliers are reviewed, evaluated, and chosen to become part of the company’s supply chain. Shin et al. (2000) argue that several important factors have caused the current shift to single sourcing or a reduced supplier base. First, multiple sourcing prevents suppliers from achieving the economies of scale based on order volume ABSTRACT