A heuristic application of systems reliability optimization in supplier selection problem of a make-to-order supply chain

It is widely recognized that supplier selection is a critical issue in supply chain management. In the context of supplier selection in various phases of supply chain, a company has to take decisions regarding the effective selection of suppliers to procure raw materials, process it and finally deliver the finished products efficiently. Deciding on the number of suppliers at each stage of the supply chain network is crucial. Recently, optimizing system reliability has also emerged as a popular research area. Notably, the structure of the system reliability optimization problem closely resembles that of the supplier selection problem in supply chains. This paper explores the application of system reliability optimization concepts in supplier selection for make-to-order supply chains. Initially, supplier reliability is defined, and the supplier selection problem is formulated as a reliability maximization problem for a parallel-series system, constrained by cost and the maximum number of suppliers at each stage. A heuristic technique is developed to solve this problem, demonstrated with numerical examples. The solution identifies the selected suppliers at each stage and the corresponding minimum total supply chain cost. Analysis of these solutions reveals practical insights. Finally, sensitivity analyses concerning various heuristic and model parameters are conducted and presented graphically.