Bi‐negotiation integrated AHP in suppliers selection

Abstract

PurposeThis paper seeks to propose a new approach for tackling the uncertainty and imprecision of identifying suitable supplier offers, evaluating these offers and choosing the best alternatives in bi‐negotiation. In a build‐to‐order supply chain, the handling of uncertainties is addressed by a real time information sharing system and appropriate supplier selection.Design/methodology/approachA methodology integrated analytic hierarchy process (AHP) with bi‐negotiation agents based on the multi‐criteria decision‐making approach and software agent technique is then developed to take into account both qualitative and quantitative factors in supplier selection.FindingsDuring the decision‐making between buyer and suppliers, the AHP process matches product characteristics with supplier characteristics. Next, agents assist the user in the debate to negotiate a joint representation of the supplier chosen and automatically justify proposals with this joint representation.Originality/valueThis study focused on a multi‐attribute negotiation mechanism including qualitative conditions, which enables automated negotiation on multiple attributes. Finally, a fuzzy membership function represented the joint representation's cognition for each condition such as quantity, price, quality, and delivery for the outsourced component. A case study in a high‐end computer manufacturing company is given to demonstrate the potential of the methodology.