Optimization-Based Buyer-Supplier Price Negotiation: Supporting Buyer’s Scenarios with Suppler Selection

다국어 초록 (Multilingual Abstract)

Purpose – The paper aims to propose an optimization model for supporting the buyer-seller negotiations. We consider the price, quality, and delivery as evaluation criteria, also recognized as objectives for negotiation.
Research design, data, and methodology – The methodology used in this paper involves the input-oriented DEA with the inverse optimization. Under the existence of several potential suppliers, the price would be considered to be the decision variable to conclude the negotiation so as to meet the desired level of the quality and delivery. The data set for six suppliers with three criteria is examined by the proposed approach.
Results – We present the decision aid model by displaying the price spectrum as the changes of desired output levels. It overcomes the shortcomings from previous researches mainly based on the discrete types of scenario generations. This approach shows that the obtained results help the buyer understand the trade-offs between price and performance when he/she considers the negotiation.
Conclusions – The paper contributes to the numerical models for buyer-supplier negotiation in that the model for the supplier evaluation and selection is closely linked with the model for negotiation. In addition, it eliminates the unrealistic negotiation strategy, and provides the negotiation strategies that the buyer would not shift the burden on suppliers by maintaining the current efficiency.

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