Development of a decision support system for procurement operations

Abstract

The procurement function refers to the purchase of items (e.g. raw materials, standard production items, capital goods, and services) to support business operations. Increasingly, companies are recognising that procurement is a profit-contributing activity, instead of a routine-order placing function. However, the absence of an adequate software support system to assist the purchasing manager results in inefficient and ineffective procurement, and thus may affect the profitability of the entire organisation. A prototype decision support system for procurement was developed during this research. It focuses primarily on procurement operations within a manufacturing environment. The system assists the purchasing manager in his decision-making process, including vendor selection and the development of an optimal procurement strategy. Integer programming and analytical hierarchy process models are incorporated to support these objectives. 'What-if' analysis features are also included to help determine favourable alternatives in a changing market environment.