Supplier Performance Evaluation Using a Nonparametric Approach

The success of a supply chain is highly dependent on the selection of the best suppliers. These decisions are an important component of production and logistics management for many firms. Little attention is given in the literature to the simultaneous consideration of cardinal and ordinal data in the supplier selection process.

This paper proposes a new Data Envelopment Analysis (DEA) approach with efficient and inefficient frontiers that is able to identify the best supplier in the presence of both cardinal and ordinal data.

Utilizing this approach, an innovative method is proposed for prioritizing suppliers by considering multiple criteria. Applicability of the proposed method is illustrated using a data set that includes specifications of eighteen suppliers.

Originality/Value: 

The advantage of our approach is that it identifies the best supplier using interval efficiency values which are computed from the optimistic and pessimistic perspectives and are integrated as an efficiency interval called the overall performance efficiency interval based on DEA with efficient and inefficient frontiers.