Multicriteria decision model for outsourcing contracts selection based on utility function and ELECTRE method

An outsourcing contract problem has been analyzed. This is a typical problem when dealing with outsourcing vendor selection. For each alternative of an outsourcing contract there is an evaluation of both cost and quality of service. The latter may include probabilistic delivery time and confidence in quality commitment. The decision-maker takes into account multicriteria evaluation through ELECTRE method. Besides, each criterion is evaluated through a utility function. The model integrates both approaches to indicate a contract proposal. This paper presents the formulation for the decision model and a numerical application to illustrate the use of the model. (c) 2006 Elsevier Ltd. All rights reserved.