Decision Sciences Journal
Volume 28, Number 2
Spring 1997
Contractor Accreditation: A Probabilistic Model
Sumit Sarkar and Deb Ghosh
Department of Information Systems and Decision Sciences, Louisiana State University, Baton Rouge, LA 70803
ABSTRACT
The selection of competent contractors is a critical function in all business organizations. In contrast to other types of vendors (e.g., distributors, manufacturers, etc.), contractors are typically accredited before any business transaction takes place. In such situations, there is often a considerable amount of uncertainty associated with the accreditation process. This research presents a probabilistic model for accrediting contractors. We discuss a methodology in which probability measures are used to capture the uncertainty inherent in the decision process. These probabilities are estimated from data on (i) past applicants and (ii) their eventual performance, if accredited. Furthermore, these probabilities are used to determine when additional information about an applicant should be collected, as well as what kind of information would be most relevant for the vendor under consideration.
Subject Areas: Decision Analysis, Decision Support Systems, Probability Models, and Purchasing.
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