Supplier evaluation and selection using Taguchi loss functions

The purchasing function directly affects the competitive ability of a firm. Purchasing managers need to periodically evaluate supplier performance in order to retain those suppliers who meet their requirement. Four attributes are frequently used as performance criteria. These attributes are quality, on-time delivery, price and service. An evaluation and selection system of suppliers using Taguchi loss functions is proposed in this paper based on these four attributes. These four attributes are transferred to the quality loss and combined to one decision variable for decision making. It is useful to make supplier evaluation and selection for promoting the competitive ability of a firm. An example of application to supplier evaluation and selection is also presented.