A Multicriteria Multilevel Group Decision Method for Supplier Selection and Order Allocation

Abstract

Supplier selection is an integral part of supply chain management (SCM). It plays a prominent role in the purchasing activity of manufacturing and trading companies. Evaluation of vendors and procurement planning requires simultaneous consideration of tangible and intangible decision factors, some of which may conflict. A large body of analytical and intuitive methods has been proposed to trade off conflicting aspects of realism and optimize the selection process. In the large companies the fields of decision makers’ (DMs) expertise are highly distributed and DMs’ authorities are unequal. On the other hand, the decision components and their interactions are very complex. These facts restrict the effectiveness of using the existing methods in practice. The authors present a multicriteria decision analysis (MCDA) method which facilitates making supplier selection decisions by the distributed groups of experts and improves quality of the order allocation decisions. A numerical example is presented and applicability of the proposed algorithm is demonstrated in the Raiffeisen Westfalen Mitte, eG in Germany.