Delivery performance in vendor selection decisions

Increased reliance upon outsourcing has made the issue of vendor selection even more critical to the success of the modern manufacturing organization. The usual performance measure on which selection is based has been the distribution of the vendor’s delivery lead-time (LT), often as characterized by the mean and variance. In this paper, we show that the distribution of demand per unit time (DPUT) must also be considered if an optimal decision is to be made.