ORIGINAL CONTRIBUTION Supplier Selection Using Weighted Utility Additive Method Prasad Karande • Shankar Chakraborty Received: 20 December 2011 / Accepted: 29 January 2015 Ó The Institution of Engineers (India) 2015 Abstract Supplier selection is a multi-criteria decision- making (MCDM) problem which mainly involves evaluating a number of available suppliers according to a set of common criteria for choosing the best one to meet the organizational needs. For any manufacturing or service organization, select- ing the right upstream suppliers is a key success factor that will significantly reduce purchasing cost, increase downstream customer satisfaction and improve competitive ability. The past researchers have attempted to solve the supplier selection problem employing different MCDM techniques which in- volve active participation of the decision makers in the deci- sion-making process. This paper deals with the application of weighted utility additive (WUTA) method for solving supplier selection problems. The WUTA method, an extension of utility additive approach, is based on ordinal regression and consists of building a piece-wise linear additive decision model from a preference structure using linear programming (LP). It adopts preference disaggregation principle and addresses the deci- sion-making activities through operational models which need implicit preferences in the form of a preorder of reference alternatives or a subset of these alternatives present in the process. The preferential preorder provided by the decision maker is used as a restriction of a LP problem, which has its own objective function, minimization of the sum of the errors associated with the ranking of each alternative. Based on a given reference ranking of alternatives, one or more additive utility functions are derived. Using these utility functions, the weighted utilities for individual criterion values are combined into an overall weighted utility for a given alternative. It is observed that WUTA method, having a sound mathematical background, can provide accurate ranking to the candidate suppliers and choose the best one to fulfill the organizational requirements. Two real time examples are illustrated to prove its applicability and appropriateness in solving supplier se- lection problems. Keywords Supplier selection  Utility additive method  Weighted utility additive method  Rank Introduction Nowadays, competitive business environment has forced the manufacturing organizations to satisfy their customers who demand for increasing product variety, lower cost, better quality and faster response. Therefore, offering higher product quality is the main requirement to gain global market share. In addition, organizations operate at the lowest possible cost in a competitive market to generate substantial profit. These objectives should be kept in mind in the supplier selection process, since it enables the or- ganizations to reduce purchasing cost and improve global competitiveness [1, 2]. Selection of an appropriate supplier is an important factor affecting the eventual buyer–supplier relationship. If the selection process is performed correctly, a higher quality, longer lasting relationship can be attained. Specially, a just-in-time purchasing or delivery system directs towards development of a unique relationship be- tween the suppliers and manufacturers. Supplier selection decision is an important component of production and lo- gistics management for many organizations. Such decision entails the selection of individual suppliers to employ and P. Karande Mechanical Engineering Department, Government Polytechnic, Mumbai 400 051, Maharashtra, India S. Chakraborty (&) Department of Production Engineering, Jadavpur University, Kolkata 700 032, West Bengal, India e-mail: s_chakraborty00@yahoo.co.in 123 J. Inst. Eng. India Ser. C DOI 10.1007/s40032-015-0177-x