Decision-making for the optimal number of suppliers considering trade-off between supplier management cost and supply failure risk

This paper puts forward an optimization model to minimize the total costs including supplier management cost and risk loss cost based on the analysis of the trade-off relationship between supplier management cost and supply failure risk, in which the optimal number of suppliers is dependent variable. Then the sensitivity analysis of the relationship between the optimal number of suppliers with the proportion of management cost to the total cost, risk loss cost, and supplier reliability are made respectively. Some advices for decision-making on how to choose suppliers in different circumstances are concluded finally.