A PERFORMANCE EVALUATION MODEL BASED ON AHP AND DEA

Abstract

This research uses the concept of the Analytical Hierarchy Process (AHP) method and fuzzy set theory to modify the CCR model of the Data Envelopment Analysis (DEA) method to develop a more effective performance evaluation method which can be used to evaluate the performance of a smaller number of business units, which is usually prohibited in the traditional DEA method. The proposed method maintains all the important features of the original DEA method like the objectivity by using data to analyze an evaluation problem and the ability to suggest the improvement directions for each business unit under evaluation. In order to prove the applicability of the proposed method, a case study for the selection of suppliers for the key component of a LCD manufacturing company is given. The result shows that it can be used to choose among a small number of suppliers in a very efficient way and also can provide improvement suggestions for each supplier.

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