Two Tests for Supplier Selection Based on Process Yield

Abstract

Market share is highly corrected with customer satisfaction and business success; many companies increase their outsourcing level to keep their core competition. Supplier selection problems have become an important issue of production management. Process yield is a standard criterion in the manufacturing industry as a common measure on process performance. The index S(PK) provides an exact measure on the process yield for normal processes. However, most studies considered the assessment of index S(PK) for just one single supplier; the testing procedure for suppliers selection has not been done at present. Hence, the principal purpose of this research is to determine the more capable process between two competing suppliers. Two tests are presented based on S(PK), and four bootstrap methods are used for obtaining the test statistics. By Monte Carlo simulations, performance comparisons of these methods are performed in terms of empirical size and selection power. Finally, a case on the color filter manufacturing process is investigated to demonstrate the applicability of the proposed method.