This paper presents a review of decision criteria reported in the literature for supporting the supplier selection process. The review is based on an extensive search in the academic literature. After a literature review of decision criteria, we discuss the most important criteria: quality. Then different methods and factors for assessing the quality of supplier are discussed. Results showed that all methods and factors mentioned in this paper are not appropriate tools for quality evaluation. Moreover, we propose a novel method (using loss functions) in order to assess the quality of suppliers. 1. Introduction Nowadays companies hope to establish a longer-term working relationship with the suppliers. Therefore, supplier selection is one of the main parts of decisions in supply chain management. Because there are many suppliers with many criteria, so it is impossible to find the best way to evaluate and select suppliers. Therefore, in studies, scholars have used different methods, variables, criteria, and factors in order to select the suppliers. Evaluation of suppliers is a process that leads companies to select their desired suppliers. This process has two main aims, which are to reduce all costs of purchasing and to increase the overall value of the purchasing [1]. Regarding to the costs of evaluating the suppliers (such as time and travel budget), companies basically evaluate those suppliers that have a good chance of qualifying for purchasing from them. In this process, formally, companies send expert teams to the supplier site, and with evaluating different criteria and factors, they will do an in-depth evaluation. There are different steps that must be done in the process of supplier evaluation and selection [1]. As it is shown in Figure 1, in order to evaluate and select the suppliers, companies must identify some important things such as methodologies, criteria, and problems (strategies). Figure 1: Supplier evaluation and selection process [ 1]. This paper focused on the literature review of criteria for supplier evaluation and especially the criteria related to the quality evaluation of suppliers. 2. Decision Criteria Formulation Regarding to multicriteria decision-making concept of supplier selection problems, one of the main parts of this process is to define related factors and criteria. There are many criteria such as price, quality, and process capability and on time delivery, which can affect selecting the proper supplier. There are many studies since the 1960s about factors, which affect supplier selection. Roa and Kiser [2], Ellram [3],
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