Application of Alternative Multi-criteria Decision Making Approaches to Supplier Selection Process

Abstract

In today’s highly competitive and turbulent business environment, selection of reliable and high quality suppliers has become the most important purchasing decision in order to reduce the production cost while maintaining the product quality and customer satisfaction simultaneously. The problem of supplier selection gets complicated further when a company looks for various criteria to evaluate different suppliers that lead it to become a multi-criteria decision making (MCDM) problem. This work reviews supplier selection models based on both individual and hybrid MCDM methodologies. A case study of an automobile company is presented to illustrate and propose three alternative supplier selection models based on analytic hierarchy process (AHP) as an individual MCDM methodology and data envelopment analytic hierarchy process (DEAHP) and fuzzy analytic hierarchy process (FAHP) as hybrid MCDM methodologies.