A model based on 2-tuple fuzzy linguistic representation and Analytic Hierarchy Process for supplier segmentation using qualitative and quantitative criteria

Abstract

The literature on supply base segmentation has increasingly adopted multi-criteria decision making (MCDM) techniques into recently proposed models. However, most proposals segment the supply base from the standpoint of the purchased item, which prevents them from providing guidelines that are specific to each supplier. Some authors have attempted to overcome these limitations by putting forward portfolio models based on the relationship with suppliers. These approaches use fuzzy variables and MCDM methods that take qualitative judgements by experts as the only input for decision making. However, many companies have databases with historical data about the performance of past transactions with suppliers that should be considered by expert systems that aim to comprehensively evaluate suppliers’ performance. This paper seeks to address this gap by proposing a segmentation model based on the relationship with suppliers capable of aggregating quantitative and qualitative criteria. Analytic Hierarchy Process (AHP) was used to determine the relative importance of each criteria. Fuzzy 2-tuple, a prominent computing with word (CWW) approach, was used to evaluate suppliers with a mixture of historical quantitative data and qualitative judgements by purchasing experts. An illustrative application of the proposed model was carried out in the pharmaceutical supply center (PSC) of a teaching hospital. The proposed model can be viewed as a decision support system capable of aggregating the qualitative judgements of experts and quantitative historical performance measures, thus providing guidelines to improve the relationship between suppliers and the buyer firm.