A hybrid machine learning method for procurement risk assessment of non-ferrous metals for manufacturing firms. Issue 10 (2nd November 2022)

• Record Type: Journal Article
• Authors: Ni, Jian; Hu, Yan; Zhong, Ray Y.
• Is Part Of: International journal of computer integrated manufacturing. Volume 35:Issue 10/11(2022)
• Page Start: 1028
• Page End: 1042
• Publication Date: 2022-11-02
• Subjects: Material procurement -- risk assessment -- machine learning -- GARCH -- LSTM; Computer integrated manufacturing systems -- Periodicals; 670.427
• DOI: 10.1080/0951192X.2021.1901315
• Languages: English
• ISSNs: 0951-192X

Abstract

ABSTRACT: With the growing complexity of manufacturing systems nowadays, the effective assessment of important risk factors inherent in the manufacturing process is crucial for the stability and reliability of such complex systems. Thus, this article proposes a data-driven approach using the state-of-art machine learning techniques to assess and forecast the procurement risks of non-ferrous metals associated with complex manufacturing systems. A variety of state-of-art machine learning models including ANN, LSTM, BLSTM, GARCH, as well as their combinations which compose the proposed hybrid models, are deployed and analyzed. The testing results show that the proposed hybrid machine learning method can forecast the price uncertainty in procurement and effectively evaluate the procurement risk in a precautious manner. Moreover, it is shown that the hybrid model that combines GARCH, ANN, and LSTM significantly improves the forecasting results. Besides, the optimal choice of the network configurations in the hybrid model is also analyzed via a series of sensitivity analyses. This research can serve as a useful reference for the effective assessment and control of procurement risk for manufacturing firms.