Journal of Supply Chain Management Systems

Open Access Open Access  Restricted Access Subscription Access
Open Access Open Access Open Access  Restricted Access Restricted Access Subscription Access

A Hybrid AHP and Taguchi Loss Function Method for Supplier Selection


Affiliations
1 Saintgits College of Engineering, Kerala, India
2 Department of MBA, Saintgits College of Engineering, Kerala, India
     

   Subscribe/Renew Journal


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.

Keywords

AHP, Taguchi Loss Function, Supplier Selection, Pair-wise Comparison.
Subscription Login to verify subscription
User
Notifications
Font Size


  • Aguezzou, A., & Ladet, P. (2007). A nonlinear multi-objective approach for the supplier selection, integrating transportation policies. Journal Model Management, 2(2), 157–169.

  • Albino, V., & Garavelli, A. C. (1998). A neural network application to subcontractor rating in construction firms. International Journal of Project Management, 16(1), 9–14.

  • Alencar, L., & Almeida, A. (2010). A model for selecting project team members using multicriteria group decision making. Pesquisa Operacional, 30, 221–236.

  • Barbarosoglu, G., & Yazagac, T. (1997). An application of the analytic hierarchy process to the supplier selection problem. Production & Inventory Management Journal, 38, 14–21.

  • Basnet, C., & Weintraub, A. (2009). A genetic algorithm for a bicriteria supplier selection problem. International Transactions in Operational Research, 16, 173–187.

  • Bayazit, O. (2006). Use of analytic network process in vendor selection decisions. Benchmarking: An International Journal, 13(5), 566–579.

  • Chan, C. T., & Chin, K. S. (2007). Key success factors of strategic sourcing: An empirical study of the Hong Kong toy industry. Industrial Management & Data Systems, 107(9), 1391–1416.

  • Choy, K. L., Fan, K. H., & Lo, V. (2003). Development of an intelligent customer-supplier relationship management system: The application of case-based reasoning. Industrial Management & Data Systems, 103(4), 263–274.

  • Davies, M. P. (1998). Understanding marketing. UK: Prentice-Hall.

  • De Boer, L., Labro, E., & Morlacchi, P. (2001). A review of methods supporting supplier selection. European Journal of Purchasing & Supply Management, 7(2), 75–89.

  • Gencer, C., & Gurpinar, D. (2007). Analytic network process in supplier selection: A case study in an electronic firm. Applied Mathematical Modelling, 31, 2475–2486.

  • Gomes, L., Rangel, L., & Leal, Junior Mr. (2011). Treatment of uncertainty through the interval smart/ swing weighting method: A case study. Pesquisa Operacional, 31(3), 467–485.

  • Gonzalez, R., Gasco, J., & Liopis, J. (2010). Information systems outsourcing reasons and risks: A new assessment. Industrial Management & Data Systems, 110(2), 284–303.

  • Gottschalk, P., & Solli-Saether, H. (2006). Maturity model for IT outsourcing relationships. Industrial Management & Data Systems, 106(2), 200–212.

  • Holt, G. D. (1998). Which contractor selection methodology? International Journal of Project Management, 16(3), 153–164.

  • Hui, Y. V., & Leung, L. C. (1994). Optimal economic tool regrinding with Taguchi quality loss function. The Engineering Economist, 39(4), 313–331.

  • Jennings, D. (2002). Strategic sourcing: Benefits, problems, and a contextual model. Management Decision, 40(1), 26–34.

  • Kirytopoulos, K., Leopoulos, V., & Voulgaridou, D. (2008). Supplier selection in pharmaceutical industry: An analytic network process approach. Benchmarking: An International Journal, 15(4), 494–516.

  • Liu, J., Ding, F. Y., & Lall, V. (2000). Using data envelopment analysis to compare suppliers for supplier selection and performance improvement. Supply Chain Management: An International Journal, 5(3), 143–150.

  • McCarthy, E. (1996). To outsource or not to outsourcewhat’s right for you. Pension Management, 32(4), 12–17.

  • Maggie, C. Y. T., & Tummala, V. M. R. (2001). An application of the AHP in vendor selection of a telecommunications system. Omega, 29(2001), 171–182.

  • Mansini, R., Savelsberg, M., & Tocchella, B. (2012). The supplier selection problem with quantity discounts and truckload shipping. Omega, 40(4), 445–455.

  • Masella, C., & Rangone, A. (2000). A contingent approach to the design of vendor selection systems for different types of co-operative customer/supplier relationships. International Journal of Operations & Production Management, 20(1), 70–84.

  • Ng, S. T., & Skitmore, R. M. (1995). CP-DSS: Decision support system for contractor prequalification. Civil Engineering Systems: Decision Making Problem Solving, 12(2), 133–160.

  • Nydick, R. L., & Hill, R. P. (1992). Using the analytic hierarchy process to structure the supplier selection procedure. International Journal of Purchasing & Materials Management, 28(2), 31–36.

  • Ordoobadi, S. M. (2010). Application of AHP and Taguchi loss functions in supply chain. Industrial Management & Data Systems, 110(8), 1251–1269.

  • Osman, H., & Demirli, K. (2010). A bilinear goal programming model and a modified Benders decomposition algorithm for supply chain reconfiguration and supplier selection. International Journal of Production Economics, 124, 97–105.

  • Percin, S. (2006). An application of the integrated AHP-PGP model in supplier selection. Measuring Business Excellence, 10(4), 34–49.

  • Raistrick, M. (1993). Outsourcing and communications facilities management. British Telecommunications Engineering, 12(1), 71–75.

  • Ramanathan, R. (2007). Supplier selection problem: Integrating DEA with the approaches of total cost of ownership and AHP. Supply Chain Management: An International Journal, 12(4), 258–261.

  • Saaty, T. L. (1980). The analytic hierarchy process. McGraw-Hill, New York.

  • Saaty, T. L. (1995). Decision making for leaders: The analytic hierarchy process for decisions in complex world. Pittsburgh, PA: RWS.

  • Sanayei, A., Mousavi, S. F., Abdi, M. R., & Mohaghar, A. (2008). An integrated group decision-making process for supplier selection and order allocation using multi-attribute utility theory and linear programming. Journal of the Franklin Institute, 345(2008), 731–747.

  • Sarkis, J., & Talluri, S. (2000). A model for strategic supplier selection. In Leenders, M. (Ed.), Proceedings of the 9th International IPSERA Conference (pp. 652– 661). London: Richard Ivey Business School.

  • Schramm, F., & Morais, D. (2012). Decision support model for selecting and evaluating suppliers in the construction industry. Pesquisa Operacional, 32(3), 643–662.

  • Sevkli, M., Koh, S. C., Zaim, S., Demirbag, M., & Tatoglu, E. (2008). Hybrid analytical hierarchy process model for supplier selection. Industrial Management & Data Systems, 108(1), 122–142.

  • Sommer, R. A. (2003). Business process flexibility: A driver for outsourcing. Industrial Management & Data Systems, 103(3), 177–183.

  • Soukup, W. R. (1987). Supplier selection strategies. International Journal of Purchasing and Materials Management, 23(3), 7–12.

  • Tafti, M. H. A. (2005). Risks factors associated with offshore IT outsourcing. Industrial Management & Data Systems, 105(5), 549–560.

  • Taguchi, G., & Hsiang, T. C. (1989). Quality engineering in production systems. New York, NY: McGraw-Hill.

  • Taner, T., & Anthony, J. (2000). The assessment of quality in medical diagnostic tests: A comparison of ROC/ Youden and Taguchi methods. International Journal of Health Care Quality Assurance, 13(7), 300–307.

  • Taner, T., & Anthony, J. (2006). Applying Taguchi methods to health care. Leadership in Health Services, 19(1), 26–35.

  • Timmerman, E. (1986). An approach to vendor performance evaluation. Journal of Purchasing and Supply Management, 1, 27–32.

  • Verdecho, M., Alfaro-Saiz, J., Rodriguez-Rodriguez, R., & Ortiz-Bas, A. (2012). A multi-criteria approach for managing inter-enterprise collaborative relationships. Omega, 40(3), 249–263.

  • Wang, G., Huang, S. H., & Dismukes, J. P. (2005). Manufacturing supply chain design and evaluation. International Journal of Advanced Manufacturing Technology, 25(1), 93–100.

  • Weber, C. A., & Desai, A. (1996). Determination of paths to vendor market efficiency using parallel co-ordinates representation: A negotiation tool for buyers. European Journal of Operations Research, 90(1), 142–155.

  • Weber, C. A., Current, J. R., & Desai, A. (1998). Non-cooperative negotiation strategies for vendor selection. European Journal of Operations Research, 108(1), 208–223.

  • Wu, D. D., Zhang, Y., Wu, D., & Olson, D. L. (2010). Fuzzy multi-objective programming for supplier selection and risk modeling: A possibility approach. European Journal of Operational Research, 200(3), 774–787.

  • Yan, H., & Wei, Q. (2002). Determining compromise weights for group decision making. Journal of the Operational Research Society, 53(6), 680–687.


Abstract Views: 307

PDF Views: 0




  • A Hybrid AHP and Taguchi Loss Function Method for Supplier Selection

Abstract Views: 307  |  PDF Views: 0

Authors

Benit Mary Joseph
Saintgits College of Engineering, Kerala, India
Nisa James
Department of MBA, Saintgits College of Engineering, Kerala, India

Abstract


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.

Keywords


AHP, Taguchi Loss Function, Supplier Selection, Pair-wise Comparison.

References