An integrated marginal analysis approach for build-to-order products

Abstract

This paper proposes an integrated Marginal Analysis Directed Branch and Bound (MA) and Analytic Hierarchy Process (AHP) approach to support managerial decision making. MA was developed in the 1990s to direct the design process of a complex material handling system in which a combined economic and performance justification path assists engineers in making the final judgment. The analytical procedure consists of a branching and bounding approach to criteria and alternatives, which makes the decision process transparent and provides a visualized decision path for decision makers. It has been widely employed in technology selection problems under uncertainty. In the procedure, however, the acceptance or rejection of an alternative is determined based on a priority ranking of criteria that is not capable of sensitively reflecting the decision maker׳s preference for a result. Since MA is most effective when the sensitivity of criteria is substantial in decision making, clarifying not only the priority rank but also the degree of importance of each criterion would thus be crucial. This paper applies AHP to the decision-making process, expanding the analysis method to allow for the decision maker׳s preference. A case study ascertains the validity of the proposed approach. The results obtained further suggest the possibility of expanding the approach to the diagnosis process of a user׳s preference in product specification optimization (viz. build-to-order manufacturing products).