Development-or-Switching Decisions Under Uncertainty for Dealing with Problematic Suppliers Considering the Strategic Potential

This study investigates managing the relationship with problematic suppliers.Three options are supposed, development, switching, or bearing the current situation.We consider a two-dimensional supplier evaluation structure to develop an analytical formulation for resolving the issue.The proposed solution is presented in two sections: the first section utilizes the lost market share considering the supplier performance and the second section examines the role of strategic potential as a critical indicator of suppliers besides the performance using the earned market share to make the development-or-switching decision.Results revealed that strategic potential plays a critical role in the considered decision.We develop a decision map based on the strategic potential of the incumbent and alternative suppliers.We realize that the effectiveness of the development decision is independent of the performance and relies mainly on the strategic potential of the incumbent supplier.Furthermore, besides the strategic potential of the incumbent supplier, the performance of the alternative supplier has a double effect on the optimality area of switching in the decision map.Finally, our work is numerically compared to a well-known model in the literature.