Developing a chance-constrained Free Replicability Hull model for supplier selection

Selecting appropriate suppliers has strategic significance for every company. The Free Replicability Hull (FRH) model is one of the models in Data Envelopment Analysis (DEA). In many real world applications, data are often stochastic. A successful approach to address uncertainty in data is to replace deterministic data via random variables, leading to chance-constrained DEA. In this paper, a Chance-Constrained FRH (CCFRH) model is developed; its deterministic equivalent, which is a nonlinear programme, is also derived. Furthermore, it is shown that the deterministic equivalent of the CCFRH model can be converted into a quadratic programme. In addition, sensitivity analysis of the CCFRH model is discussed with respect to changes in parameters. Finally, a numerical example demonstrates the application of the proposed model.