Integration of cluster analysis and fuzzy analytical hierarchy process in formulating cluster development strategy of tempeh chips SMEs

Abstract

The aim of this study was to classify tempeh chips Small and Medium Enterprises (SMEs) in Malang City and to decide the development strategy priorities for each cluster. K-means clustering was used to classify tempeh chips SMEs, with criteria include monthly production capacity, length of business, average monthly sales value, investment value, and number of workers. The priorities of development strategy for each cluster were determined using Fuzzy Analytical Hierarchy Process (FAHP), with factors such as industrial cluster, government, and also supporting and related industries. The results indicated that two clusters of tempeh chips SMEs were formed. The first cluster classified as micro enterprises, consist of SME I and SME C, and the Second cluster classified as small enterprises, consist of SME A, SEM B, SME D, SME E, SME F, SME G, and SME H. The priorities of development strategy for the first cluster are conducting product standardization and training to SMEs owners about business development, while for the second cluster are conducting product standardization and increasing sales and product promotion.