THE USE OF AHP METHOD FOR SELECTION OF SUPPLIER

Roman Hruška · Darko Babić

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Multi-Criteria Decision Making Quality and Supply Management Decision Support System Applications

Abstract

To increase flexibility in today’s global marketplace is needed to remain competitive and respond to rapidly changing markets. From that point of view, supplier selection represents one of the most important functions to be performed by the purchasing department. The supplier selection is a multi-criterion problem which includes both quantitative and qualitative criteria. In order to select the best suppliers, it is necessary to make a trade off between these criteria. The article deals with supplier selection using the Analytic Hierarchy Process (AHP). AHP provides a framework for making effective decisions in complex decision situations (e.g. vendor selection), helps to simplify and accelerate the natural process of decision making. AHP is a method of decomposition of complex unstructured situation into simpler components, thus creating a hierarchical system problem. The paper describes the general design of model supplier selection using the AHP with an application of the proposed model in a manufacturing company that selects a suitable supplier of three potential suppliers. The aim of this paper is to understand the strategic operating decision area of the supplier selection process and to aid decision makers with varying degrees of importance to reach consensus in rating alternative suppliers.

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References

1985The Analytic Hierarchy Process 1979Optimization by the Analytic Hierarchy Process 1991Vendor selection criteria and methods 2005Analytic Hierarchy Process 2001The total cost of logistics in supplier selection, under conditions of multiple sourcing, multiple criteria and capacity constraint 1998An analysis of the supplier selection process 2009Purchasing and Supply Chain Management: Analysis, Strategy, Planning and Practice 2002Supplier Selection and Assessment: Their Impact on Business Performance

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