An application of the integrated AHP‐PGP model in supplier selection

Abstract

PurposeThe supplier selection problem has gained great attention in business management literature. The first objective of this study is to determine the required variables in selecting the best suppliers and to develop a supplier selection model based on these selected variables. The second objective is to explain how an integrated AHP‐PGP model can be used in supplier selection decisions while minimizing suppliers' defects rate, rate of late order delivery, purchasing costs, and maximizing suppliers' scores and after‐sales service levels.Design/methodology/approachAn integration of an analytic hierarchy process (AHP) and multi‐objective pre‐emptive goal programming (PGP) is used to consider both quantitative and qualitative factors in selecting the best suppliers and allocating the optimum order quantities among them.FindingsThe integrated model is presented with a real‐world application using source data provided by the manufacturing firm operating in an automotive industry in Turkey. Findings demonstrate that the integrated AHP‐PGP model can be useful to all firms in their supplier selection decisions.Research limitations/implicationsThe integrated model presented in this study could be used to incorporate criteria such as quantity discount, demand satisfaction and budget constraints, etc. Further, the AHP approach could be extended with the genetic algorithm or data envelopment analysis techniques in solving such a problem.Originality/valueAlthough there is considerable research in the literature, this study differs from the literature by introducing stages of the AHP model extensively, and adding a service objective function related to the suppliers' after‐sales service levels. In addition, the paper is especially of interest to both practitioners and researchers.