Simulation of the Procurement Process With Risk Consideration Using Decision Trees

Abstract

The article proposes an approach to modeling the procurement process under risk using the decision tree method. A universal multi-criteria model has been developed, enabling the analysis of supply alternatives considering key economic indicators and risk factors. The system of criteria includes purchase cost, delivery expenses, potential supply delays, payment delays, and the risk of receiving defective products. For each of these criteria, probabilistic scenarios of corresponding events have been defined, and expected costs have been calculated. The decision tree method is applied to visualize the decision-making process and to implement folding and pruning procedures. A multi-criteria comparison of alternatives is carried out using classical optimization methods. The model can be used as a tool to support managerial decision-making in procurement logistics