Combining Analytical Hierarchy Process and TOPSIS Approaches for Supplier Selection in a Cable Company


Önder E., Dağ S.

Journal of Business, Economics and Finance (JBEF), vol.2, no.2, pp.56-74, 2013 (Peer-Reviewed Journal)

Abstract

In  the  competitive  business  environment  of  the  21st  century,
organizations must reply quickly and precisely to customer demands.
The choice of suppliers and their performance assessment are becoming
major  challenges  that  face  supply  chain  managers  or  directors.
Evaluating suppliers and selecting one of them are complicated tasks
due to the fact that various criteria or objectives must be considered in
the decision making process. Also in many real world cases the criteria
are not equally important for the purchase managers. In this study, we
proposed a supplier selection analysis model considering both Analytic
Hierarchy  Process  (AHP)  and  Technique  for  Order  Preference  by
Similarity to Ideal Solution (TOPSIS) method. Subjective and objective
opinions of purchase managers/experts turn into quantitative form with
AHP. TOPSIS technique is used for calculating the supplier’s ratings.
The aim of this paper is to determine the appropriate supplier providing
the most customer satisfaction for the criteria identified in the supply
chain. In this paper, data taken from a well-known cable manufacturing
company in Turkey is used to illustrate the supplier selection procedure.
Due to the fact that main raw material used in all cables, the company
strongly  focuses  on  supply  of  the  Electrolytic  Copper  Cathode.  The
company  detects  eight  different  criteria  for  procurement  of  the
Electrolytic  Copper  Cathode.  These  are  origin,  quality,  availability,
cost, delivery requirements, cost of conveyance, reliability of supplier
and quality certificates. There are four firms providing the Electrolytic
Copper Cathode for the company.