Supplier selection process with analytic hierarchy process (AHP) and technique for order preference by similarity to ideal solution (TOPSIS) algorithm

Abstract

Supplier of a company increases its own economic strength and profitability. Speed of production, quality and cost of the product are some of the main goals of the companies to optimize. The multi-criteria aspect of the decision process of a company, including the supplier selection, increased the complexity of the management process. In this study, the methods for selection of suppliers for a company located in Bosnia and Herzegovina (BiH) are analyzed. The methods analytic hierarchy process (AHP) and technique for order preference by similarity to ideal solution (TOPSIS) algorithms are used together to analyze the company’s decisions. Assessments have been done and at the end of the study the strengths and the weaknesses of the two-phase AHP and TOPSIS are discussed.   Key words: Multi-criteria decision process, supplier selection, analytic hierarchy process (AHP), technique for order preference by similarity to ideal solution (TOPSIS).