Supplier selection in supply chain disruption with credit concept and Exponential demand function

ABSTRACT In this study a supply chain model is developed to select the suppliers in a disruption state. Two critical probabilities of disruption are derived and various options of supplier’s selection are determined with the help of these critical probabilities. One buyer and two suppliers are considered in this study. One of the suppliers is located outside of the buyer’s geographical scope and offers competitive price. This supplier is prone to breakdowns. Another supplier is a local supplier more reliable but expensive. The credit concept is also included in the model. The application of the model is explained with the help of a numerical example. Sensitivity experiments are carried out to examine the effect of the variation of model parameters on buyer’s profit.