The application of AHP-PROMETHEE II for supplier selection

Abstract

The evaluation and selection of the best supplier is a crucial decision-making process as it can reduce the supply chain cost and increase the quality of items supplied to a company. Choosing suppliers solely based on their previous experiences may contribute to higher purchase risk. The decision-making process is usually influenced by a variety of criteria that are often in conflict. Thus, this study employs the integration of Analytic Hierarchy Process (AHP) method and Preference Ranking Organization Method for Enrichment of Evaluation (PROMETHEE) II to handle supplier selection issues. AHP method was adopted to evaluate the weights of criterion. PROMETHEE II is a Multi-Attribute Decision Making method that is based on a mutual comparison of each alternative pair with respect to each of the selected criterion allowing the rankings of the alternatives from the best to the worst. A real-life data about supplier selection for railways project was used to demonstrate the operation of AHP-PROMETHEE II method. The data involved four decision makers, five alternatives (SI, S2, S3, S4, S5) and eight criteria specifically; aspect of the items (C1), arrangement of time (C2), shipment accomplishment (C3), total price of the item (C4), way of payment (C5), relation with supplier (C6), scope of product (C7), and supplier’s professional ability (C8). The findings showed that C4 was the most preferred criterion among the chosen criteria. Thus, the ranking order for criteria was C4 > C8 > C1 > C2 > C5 > C7 > C6 > C3 while the ranking order for the alternatives was S2 > S1 > S4 > S3 > S5, respectively. The findings were then compared with the result from the previous research. The sensitivity analysis was conducted by reducing criteria weights to zero. In conclusion, AHP-PROMETHEE II can be used to analyse the perfect order from best to worst.