Fuzzy-AHP approach to improve effectiveness of supply chain

Abstract

The supply chain is an important element for the development of all industries. It can improve efficiency and effectiveness of product transfer and information sharing between complex hierarchies of all the tiers. Supplier selection is an important step in the supply chain design. In many existing decision models for supplier selection, only quantitative criteria are considered. However, supplier selection is a multi-objective problem containing quantitative as well as qualitative factors. It is difficult to map human perception to particular number or a ratio due to vagueness in the decision making process. Fuzzy Analytic Hierarchy Process (FAHP) therefore helps the decision makers to deal with imprecision and subjectiveness in pair-wise comparison process. This study aims to provide a systematic approach towards the application of FAHP to supplier selection problem. FAHP is applied to find the importance degree of each criterion as the measurable indices of the supplier. From an extensive analysis of the results, it is observed that selection of an appropriate supplier would result in improving effectiveness of supply chain. Thus, the overall rank ordering of alternatives as identified by fuzzy AHP seems reasonable and consistent with managerial preferences and judgments.© Springer-Verlag Berlin Heidelberg 2014.