Title: Determining sourcing strategies : A decision model based on activity and cost driver information
Authors: Degraeve, Zeger
Roodhooft, Filip
Issue Date: 1997
Publisher: K.U.Leuven - Departement toegepaste economische wetenschappen
Series Title: DTEW Research Report 09718 pages:1-30
Abstract: Determing 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. The model is applied to the case of ball bearings at Cockerill Sambre S.A., a Belgian multinational company in the steel industry.
Publication status: published
KU Leuven publication type: IR
Appears in Collections:Research Center Accountancy, Leuven

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