Make-to-order or make-to-stock decision by a novel hybrid approach

Abstract

This paper presents a strategic decision-making structure to determine whether a particular product should be produced under make-to-order (MTO) or make-to-stock (MTS) strategy. A novel hybrid methodology consisting of strengths, weaknesses, opportunities and threats (SWOT) analysis and analytic hierarchy process (AHP) is proposed. Utilizing AHP in SWOT analysis diminishes one of the main deficiencies of this strategic approach that is the restriction of employing quantitative calculation to evaluate the factors that affect the decision. AHP method improves the quantitative information basis of strategic decision-making processes. The traditional AHP requires exact judgments, but due to the complexity and uncertainty involved in real world decision problems, it is sometimes unrealistic or even impossible to require exact judgments. Consequently, a commonly used decision-making method, fuzzy analytic hierarchy process (FAHP) is suggested. FAHP’s connection to SWOT yields a novel hybrid method for partitioning of MTO/MTS products. At the end, the proposed fuzzy AHP–SWOT methodology is validated through a real case study.