Chiang Mai Journal of Science

Evaluating potential suppliers is an important factor in manufacturing processes. An effective decision process for selecting suppliers contributes to good manufacturing performance and low cost of production. A manufacturer may assess the quality of suppliers by using process capability indices (PCIs) such as C_p, C_pk, C_pm and C_pmk. However, PCIs are not presented in financial loss terms and quality is not the only important decision factor for selecting suppliers. Other important factors are reliability of delivery and price of product. This paper develops a new model for comparing multiple suppliers. The model consists of three main decision factors for supplier selection, namely, quality, delivery time and price of product. The Taguchi loss function is used to estimate expected loss. A numerical example is given to compare the proposed new model for supplier selection with a model using C_pk criteria.