Requirement-driven supplier selection: a multi-criteria QFD-based approach under epistemic and stochastic uncertainties

Abstract

Supplier selection (SS) has emerged as a critical challenge for companies aiming to enhance the operational management of their supply chains, a task that has grown in complexity with the advent of Industry 4.0 and the ongoing digital transformation. Recognizing the gaps in current literature—specifically, the lack of consideration for stakeholders' expectations in guiding SS, as well as the inadequate handling of epistemic and stochastic uncertainties—this paper introduces a multiple-criteria Quality Function Deployment (QFD)-based model for SS. To address epistemic uncertainty, we put forward a novel subjective judgment representation method, which is named as linguistic term set integrated with discrete subjective probability distribution (LTS-DSPD), to enable decision-makers to express their judgments in a manner that is both simpler and more nuanced. Furthermore, we also give the elicitation methods and computing techniques for LTS-DSPD. Then, we integrate stakeholders’ requirements, along with their preferences and expectations for these requirements to inform and guide SS. To effectively operationalize this guidance, we design the QFD-based methods to transform stakeholders' inputs into the assessment criteria for SS, the weights of criteria, and the expectations for the performances of suppliers on each criterion, respectively. To address stochastic uncertainty, we have developed an innovative methodology for characterizing it, and adopt prospect theory to quantify the overall utility of alternative suppliers. The paper concludes with a case study to demonstrate its practical application and effectiveness in streamlining SS process.