Model for evaluating the virtual enterprise’s risk with 2-tuple linguistic information

Abstract

With the increasingly fierce competition in the market, the virtual enterprises are becoming a realistic choice of enterprises. As a new business mode, the virtual enterprises bring tremendous opportunities to improve the competitiveness of enterprises to a certain degree. However, without enough practical and proper theoretical experience, the failure probability of virtual enterprises is high. The virtual enterprises have certain advantages, but the complexity of their organization makes the uncertainties increasing, the risk analysis control is difficult and the risk management is complex. In order to achieve smooth operation and expected profits, the virtual enterprises must succeed to avoid the risks. Therefore, the risk management for virtual enterprises is significant in theoretical and practical research. In this paper, we investigate the 2-tuple linguistic multiple attribute group decision making problems with incomplete weight information, some basic concepts and operational laws of 2-tuple linguistic variables are introduced. A model based on the entropy weight method, by which the attribute weights can be determined, is established. According to the traditional ideas of grey relational analysis (GRA), the optimal alternative(s) is determined by calculating the linguistic degree of grey relation of every alternative and 2-tuple linguistic positive ideal solution and 2-tuple linguistic negative ideal solution. It is based on the concept that the optimal alternative should have the largest degree of grey relation from positive ideal solution and the smallest degree of grey relation from the negative ideal solution. Finally, an illustrative example for evaluating the virtual enterprise's risk is given to verify the developed approach and to demonstrate its practicality and effectiveness.