Fuzzy Approximation
Int J Adv Manuf Technol (2006) 29: 826–835 DOI 10.1007/s00170-005-2562-8
ORIGINAL ARTICLE
A. Noorul Haq · G. Kannan
Fuzzy analytical hierarchy process for evaluating and selecting a vendor in a supply chain model
Received: 23 October 2004 / Accepted: 12 January 2005 / Published online: 16 November 2005 © Springer-Verlag London Limited 2005 Abstract The paper proposes a structured model for evaluating vendor selection using the analytical hierarchy process (AHP) and fuzzy AHP. The model is developed using evidence from an empirical study. The paper aims to demonstrate how the model can help in solving such decisions in practice. A usability evaluation of the AHP-based model with three vendors is discussed. It also examines the structure of the decision hierarchy, whether it can represent vendor selection decisions in reality and whether it covers all key factors affecting vendor selection choices. The effectiveness of the AHP model is illustrated using a company in the southern part of India and the results validated using fuzzy AHP. Keywords Analytical hierarchy process (AHP) · Fuzzy AHP · Pair wise comparison · Supply chain management · Vendor selection which satisfies the service policy, maintaining the lowest possible cost level due the incredible competition environment that they are exposed to. A supply chain is a network of departments, which is involved in the manufacturing of a product from the procurement of raw materials to the distribution of the final products to the customer. Purchasing commands a significant position in most organizations since purchased parts, components, and supplies typically represent 40 to 60of the sales [1] of its end products. This means that relatively small cost reductions gained in the acquisition of materials can have a greater impact on profits than equal improvements in other cost-sales areas of the organization. There has been an evolution in the role and structure of the purchasing function through the 1990s.
ORIGINAL ARTICLE
A. Noorul Haq · G. Kannan
Fuzzy analytical hierarchy process for evaluating and selecting a vendor in a supply chain model
Received: 23 October 2004 / Accepted: 12 January 2005 / Published online: 16 November 2005 © Springer-Verlag London Limited 2005 Abstract The paper proposes a structured model for evaluating vendor selection using the analytical hierarchy process (AHP) and fuzzy AHP. The model is developed using evidence from an empirical study. The paper aims to demonstrate how the model can help in solving such decisions in practice. A usability evaluation of the AHP-based model with three vendors is discussed. It also examines the structure of the decision hierarchy, whether it can represent vendor selection decisions in reality and whether it covers all key factors affecting vendor selection choices. The effectiveness of the AHP model is illustrated using a company in the southern part of India and the results validated using fuzzy AHP. Keywords Analytical hierarchy process (AHP) · Fuzzy AHP · Pair wise comparison · Supply chain management · Vendor selection which satisfies the service policy, maintaining the lowest possible cost level due the incredible competition environment that they are exposed to. A supply chain is a network of departments, which is involved in the manufacturing of a product from the procurement of raw materials to the distribution of the final products to the customer. Purchasing commands a significant position in most organizations since purchased parts, components, and supplies typically represent 40 to 60of the sales [1] of its end products. This means that relatively small cost reductions gained in the acquisition of materials can have a greater impact on profits than equal improvements in other cost-sales areas of the organization. There has been an evolution in the role and structure of the purchasing function through the 1990s.
References: 1. Ballow RH (1999) Business logistics management. Prentice-Hall, New York 2. Dickson GW (1966) An analysis of vendor selection systems and decisions. J Purchas 2(1):5–17 3. Dempsey WA (1978) Vendor selection and the buying process. Ind Market Manage 7(3):257–267 4. Weber CA, Current JR, Benton WC (1991) Vendor selection criteria and methods. Eur J Oper Res 50(1):2–18 5. Lesonsky R (2001) Your own business: the only start-up book you’ll ever need. Entrepreneur Media Inc. 2nd edn 6. Timmerman E (1986) An approach to vendor performance evaluation. J Supply Chain Manage 22(4):2–8 7. Nydick RL, Hill RP (1992) Using the analytic hierarchy pprocess to structure the supplier selection procedure. Int J Purchas Mater Manage 28(2):31–36 8. Ellram LM (1995) Total cost of ownership: an analysis approach for purchasing. Int J Phys Distrib Logist 25(8):163–184 9. Petroni A, Braglia M (2000) Vendor selection using principal component analysis. J Supply Chain Manage: A Global Rev Purchas Supply 36(2):63–69 10. Wei SY, Jinlong Z, Zhicheng LI (1997) A supplier-selecting system using a neural network. IEEE International Conference on Intelligent Processing Systems 1:468–471 11. Dickson G (1966) An analysis of vendor selection systems and decisions. J Purchas 2(1):28–41 12. Talluri S, Narasimhan R (2003) Vendor evaluation with performance variability:a max-min approach. Eur J Oper Res 146(3):543–552 13. Weber CA, Current RJ, Benton WC (1991) Vendor selection criteria and methods. Eur J Oper Res 50(2):2–18 14. Ellram LM (1990) The supplier selection decision in strategic partnerships. J Purchas Mater Manage 26(4):8–14 15. Benton WC, Krajeski L (1990) Vendor performance and alternative manufacturing environment. Decis Sci 21(2):403–415 16. Weele AJ (2000) Purchasing and supply chain management: analysis, planning, practice 2nd edn. Int Thomson Business, Albany 17. Patton WW (1996) Use of human judgment models in industrial buyer’s vendor selection decisions. Ind Market Manage 25(2):135–149 18. Stanley LL, Wisner DJ (2001) The determinants of service quality: issues for purchasing. Eur J Purchas Supply Manage 8(2):97–109 19. Verma R, Pullman ME (1998) An analysis of the supplier selection process. Omega, Int J Manage Sci 26(6):739–750 20. Lambert D, Stock J, Ellram L (1998) Fundamentals of logistics management. McGraw-Hill, New York 21. Weber C, Current J, Desai A (1997),Non-cooperative negotiation strategies for vendor selection. Eur J Oper Res 108(2):208–223 22. Mikhailov L (2003) Deriving priorities from fuzzy pairwise comparision judgements. Fuzzy Sets Syst 134(3):365–385 23. Sheu J-B (2004) A hybrid fuzzy-based approach for identifying global logistics strategies. Transport Res Part E 40:39–61 24. Chan FTS, Chung SH (2004) Multi-criteria genetic optimization for distribution network problems. Int J Adv Manuf Technol 24(7–8):517–532 25. Vaidya OS, Kumar S (2004) Analytic hierarchy process: An overview of applications. Eur J Oper Res (published online, 12 April 2004) 26. Handeld R, Walton SV, Sroufe R, Melnyk SA (2002) Applying environmental criteria to supplier assessment: A study in the application of the analytical hierarchy process. Eur J Oper Res 141:70–87 27. Liu F, Ding FY, Lall V (2000) Using data envelopment analysis to compare suppliers for supplier selection and performance improvement. Supply Chain Manage: Int J 5(3):143–150 28. Weber CA, Current JR, Desai A (2000) An optimization approach to determining the number of vendors to employ. Supply Chain Manage: Int J 2(5):90–98 29. Vanegas LV, Labib AW (2001) A fuzzy quality function deployment(FQFD) model for driving optimum targets. Int J Prod Res 39(1):99–120 30. Tam MCY, Tummala VMR (2001) An application of the AHP in vendor selection of a telecommunications system. Omega, Int J Manage Sci 29(2):171–182 31. Saaty TL (2000) Fundamentals of decision making and priority theory, 2nd edn. RWS, Pittsburgh, PA 32. Partovi FY (1994). Determining what to benchmark: an analytic hierarchy process approach. Int J Oper Prod Manage 14(6):25–39 33. Zahedi F (1986) The analytic hierarchy process: a survey of the method and its applications. Interfaces 16(4):96–108 34. Cheng EWL, Li H (2001) Information priority-setting for better resource allocation using analytic hierarchy process (AHP). Inf Manage Comput Secur 9(2):61–70 35. Crowe TJ, Noble JS, Machimada JS (1998) Muti-attribute analysis of ISO 9000 registration using AHP. Int J Qual Reliab Manage 15(2): 205–222 36. Chang D-Y (1996) Application of the extent analysis method on fuzzy AHP. Eur J Oper Res 95(3):649–655 37. Kaufmann A (1991) Introduction to fuzzy arithmetic theory and application. Van Nostrand, New York 38. Zhu KJ, Jing Y, Chang DY (1999) A discussion on extent analysis method and applications of fuzzy AHP. Eur J Oper Res 116:450–456 39. Slack N, Lewis M (2002) Operations strategy. Prentice-Hall, New York 40. Krajewski LJ, Ritzman LP (2002) Operations Management: Strategy and Analysis, 6th edn. Addison-Wesley, Boston