An Application of Third-Party Certification for Supplier Selection Based on Signaling Game

The supplier selection process is a strategic decision making process in supply chain management, and independent third-party certification (TPC) agency plays an important role in supplier selection. The signaling game model is established after analyzing the behaviors of the buyer and supplier under the circumstances of incomplete market information, and separating equilibrium and pooling equilibrium are worked out and analyzed. The efficient supplier certified by authoritative TPC shall be encouraged and selected by the buyer. The speculative supplier has to give up due to the prohibitive costs, and the market order shall be maintained.