ITEM METADATA RECORD
Title: Determining sourcing strategies: a decision model based on activity and cost driver information
Authors: Degraeve, Zeger ×
Roodhooft, Filip #
Issue Date: Aug-1998
Publisher: Stockton press
Series Title: Journal of the operational research society vol:49 issue:8 pages:781-789
Abstract: Determining sourcing strategies for different material groups provides a major challenge to most companies. There has been little research on the choice of the optimal number of different suppliers for a given product group and the determination of their market shares. In this paper we propose a mathematical programming model using activity based costing information to determine optimal order splitting among suppliers on the basis of the different costs associated with the purchasing decision. We argue that sourcing strategies should be based on the minimisation of the total cost of ownership resulting from external purchases. We demonstrate the model by a real life case regarding the procurement of ball bearings at Cockerill Sambre S.A., a Belgian multinational steel producer. This decision support system is currently used by the company. This case resulted in the decision by management to develop comprehensive, company wide purchasing software using our mathematical program based on the total cost of ownership concept.
URI: 
ISSN: 0160-5682
Publication status: published
KU Leuven publication type: IT
Appears in Collections:Research Center for Operations Research and Business Statistics (ORSTAT), Leuven
Research Center Accountancy, Leuven
× corresponding author
# (joint) last author

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