A model for supplier selection using value engineering-based type-2 fuzzy approach – The case of Nasr Niroo Engineering Company in Yazd

This research aims to propose an integrative approach for selecting suppliers for Nasr Niroo Engineering Company in Yazd. The proposed model applies value engineering in a type-2 fuzzy environment.

Design/methodology/approach: 

First, the purchase value has been calculated for each supplier using type-2 fuzzy data and the experts' opinions. Then, by dividing the value by the cost coefficient, the purchase value function of each supplier has been calculated for each product. The purchase value coefficients have been determined according to the opinion of experts and the buyers of equipment. In this research, verbal data has been collected from the experts, and out of this data, type-2 fuzzy numerical data has been extracted, calculated, and applied. The influence of type-2 fuzzy numbers in reducing uncertainty in the collected expert opinions has been the cause of such a problem. Following the determination of the purchase value function for each supplier, it has been assumed that quantitative information such as order cost, purchase cost, as well as each supplier's return rate, are also effective in selecting each supplier.

In this study, the subject of supplier selection was examined and solved for four separate product categories - iron, fibre, insulators, and fittings - for which there were two, two. Four, and four different suppliers, respectively. After examining and solving the model considering the purchase value index as well as additional parameters including ordering and purchasing costs, each supplier's capacity, and the rate of return and failure of parts, five suppliers were selected. Two suppliers were selected for iron, and one supplier was selected for each of the other three products.  

Research limitations/implications: 

The application of the proposed model appears to be highly difficult due to the numerous fuzzy number calculations, and obtaining information in this area is one of the limitations of this model. Also, type-2 fuzzy numbers could not be used for mathematical modelling and solution, because no model has been presented yet for the optimal solution of linear programming problems using type-2 fuzzy numbers.

Practical implications: 

The simultaneous use of value engineering techniques or multi-criteria decision-making methods with mathematical models can improve qualitative factors along with improving quantitative factors. This method can be used in project portfolio selection problems and problems with multiple quantitative and qualitative factors as well as different prices and values.

Social implications: 

For reasons such as the utilization of experts' perspectives on the quality factors affecting the selection of suppliers, the model described in this study can help ensure proper supplier selection; transforming the opinions of experts into type-2 fuzzy numbers, which is a practical method for reducing errors and uncertainty in judgments; employing value engineering to analyze viewpoints while keeping in mind the value of purchasing from each provider; using a mathematical model that accounts for costs, the percentage of orders that fail, and defects of order, which may be based on prior experiences or the supplier's announcement. Also, the use of type-2 fuzzy numbers is one of the solutions to face uncertainty in a system.

Originality/value: 

The topic of measuring the value of purchasing from suppliers is concentrated in this study instead of using other indicators such as purchasing risk, as a new indicator. Also, the simultaneous review of quantitative and qualitative data for the selection of suppliers can be considered one of the strengths of the reviewed model. Utilizing indications such as purchase value will be far more effective and better than using multi-criteria decision-making procedures, as seen when comparing this model with other applied models. The use of type-2 fuzzy numbers to lessen the uncertainty associated with using expert opinions and the development of the value calculation method in the area of supplier selection are the two major innovations of this study.