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Direct or indirect delivery in multiple sourcing strategy: A lexicographic model

The decision of supplier selection is strategic because it impacts the total performance of the company. A literature review on this field shows that studies that explicitly consider the impact of direct or indirect delivery on this decision are scarce. In this paper, a multi-objective programming model, based on lexicographic method, is proposed to simultaneously determine the optimal number of suppliers to employ and the order quantities to allocate to them, taking into account the transportation policies. The objectives to minimize are total logistics cost and leadtime, under suppliers, buyer and transportation constraints. A comprehensive example is provided to illustrate the model.