A portfolio theory approach to software vendor selection

Abstract

The paper presents a minimum risk model, inspired from the financial portfolio theory, for the selection of a software vendor. The performance of the software products offered by potential software vendors is evaluated by several experts regarding several criteria. The minimum risk model has several constraints. One of the constraints is a complementarity constraint. Other constraints are connected with the available budget and the expected performance of the software products. A procedure for solving the minimum risk model is presented and a numerical example is analyzed.