Ant Colony Optimization Algorithm for Vendor Selection in Information Systems Outsourcing

Information systems outsourcing has been one of the critical issues in information systems management. Various strategies to IS outsourcing have emerged. Although many articles have appeared on outsourcing, few have extended the discussion beyond simple cost and benefit analysis. Vendor selection is a difficult problem which includes both tangible and intangible factors. Until now, there are no effective quantitative decision models which can help outsourcer to choice vendors. In this paper, an IS outsourcing optimization model is proposed to select IS providers, while considering the cost and the risk simultaneously. Then according to the complicated nonlinear integer programming model, a modified version of ant colony optimization (ACO) is proposed to solve it. Finally, the computing results on a numerical example show the effectiveness and feasibility of the model and algorithm.