A Fuzzy Multi Criteria Decision Making Approach for Vendor Evaluation in a Supply Chain

Abstract

Manufacturing enterprises face enormous competitive pressures in today’s business environment and to make full use of inside and outside resources in a competitive globalization market, many manufacturers and service providers are seeking a strategic cooperation with suitable vendors to improve their supply chain management (SCM) so that they can concentrate their efforts on their own core business. Hence, there is a necessary to select the best suppliers among various suppliers available. The decision parameters in vendor selection contains vague and uncertainty. The fuzzy theory able to handle this uncertainty, vague, imprecision and subjectivity present in vendor selection process and makes decision process more effective. In the research, we have analyzed an existing system of vendor rating and proposed a better system of vendor rating for the organization. Most organizations use simple additive weighting for vendor rating. However, we have attempted to use the fuzzy decision making method for the purpose. In the proposed approach, linguistic values are used to assess the ratings and weights for these factors. These linguistic ratings can be expressed in trapezoidal or triangular fuzzy numbers. Then, a hierarchy multiple criteria decision-making (MCDM) model based on fuzzy theory is proposed to deal with the supplier selection problems in the supply chain system.