Supplier selection: Reliability based total cost of ownership approach using Cuckoo search

Abstract

Traditional supplier selection methods are often based on the quoted price, which ignores the significant direct and indirect costs associated with quality, delivery, use and service cost. This paper proposes Reliability based total cost of ownership (RBTCO) model by incorporating the initial cost, replacement cost and downtime cost. The mathematical formulation of the RBTCO model for the supplier selection problem fits into the nonlinear integer programming problem, which belongs to the NP-hard category. A recently developed Cuckoo search algorithm is used to provide the optimal solutions. The performance of the algorithm is tested with numerical problems. © 2012 Springer-Verlag.