Selection of supplier portfolio in the presence of operational risk and disruption risk

In a make-to-order environment, manufactures should make preparations for production to fulfill stochastic customers´ demand at low costs and risk levels. This research focuses on two risk levels: operational risks and disruption risks, and correspondingly, two kinds of evaluation models-value at risk and conventional value at risk-is presented to qualify them. Then, conventional criteria are incorporated into a multi-objective model with hybrid risks. The proposed GA-based approach is able to balance these objectives during supplier portfolio selection and order allocation. Finally, computational examples are presented to illustrate how the decision is made.