A Hybrid AHP and Taguchi Loss Function Method for Supplier Selection

This paper presents application of Analytic Hierarchy Process (AHP) in two different cases for selecting suppliers. This paper helps to compare the validity of AHP when used with a single decision maker and when used with multiple decision makers. Here, AHP is applied to two different cases: Firstly, for selecting a supplier in tyre manufacturing industry with single decision maker, and secondly, for selecting bidder for a State Electricity Board transgrid project with multiple decision makers. Five criteria were identified in both cases and pair-wise comparison was conducted. Priorities of criteria were identified and suppliers were also rated. Then it was further combined with Taguchi Loss Function to identify the best supplier. From the results obtained, we believe AHP with multiple decision makers is a more reliable form to select a supplier.