In this paper we propose an Activity Based Costing approach for vendor selection and evaluation. This system allows us to compute total costs caused by a supplier in a firm's production process, thereby increasing the objectivity in the selection process. We further show that for vendor evaluation purposes the difference between the budgeted and actual total vendor score can be decomposed in a purchaser effect, a supplier effect and a combined effect. We illustrate the Activity Based Costing approach with a case study.
- Supply management
- Vendor selection
ASJC Scopus subject areas
- Computer Science(all)
- Modelling and Simulation
- Management Science and Operations Research
- Information Systems and Management