A DECISION SUPPORT SYSTEM FOR PURCHASING MANAGEMENT OF LARGE PROJECTS

Abstract

This paper describes a model base Decision Support System (DSS) for purchasing materials and components for large projects. The DSS may be used under two scenarios. Under one scenario, we have a project to execute, and we are looking for a good way to manage the purchasing so as to minimize the expected costs. The decision variable under our control is when and from whom to order each item. Under the other scenario, we are bidding for the project, and wish to assess the costs associated with the purchasing decisions which we should consider before making our bid. In both cases we take into account expected out of pocket costs as well as lateness and/or expediting penalties. The DSS is designed to help us choose the best supplier for each item and schedule the placement of the orders--decisions which are very difficult to make well without such a model base DSS.