Integrating Fuzzy Delphi with Fuzzy Analytic Hierarchy Process for Multiple Criteria Inventory Classification Golam Kabir1

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Journal of Engineering, Project, and Production Management 2013, 3(1), 22-34

Integrating Fuzzy Delphi with Fuzzy Analytic Hierarchy Process for Multiple Criteria Inventory Classification Golam Kabir1 and Razia Sultana Sumi2
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PhD Student, Department of Civil Engineering, University of British Columbia, Kelowna, British Columbia, Canada. Email: gk.raju@yahoo.com (corresponding author). 2 Assistant Professor, Department of Business Administration, Stamford University, Bangladesh, Dhaka, Bangladesh. Email: sumi2681@yahoo.com Production Management Received March 7, 2012; revisions April 3, 2012; April 6, 2012; accepted April 12, 2012 Available online June 25, 2012

_________________________________________________________________________________________  Abstract: A systematic approach to the inventory control and classification may have a significant influence on company competitiveness. In practice, all inventories cannot be controlled with equal attention. In order to efficiently control the inventory items and to determine the suitable ordering policies for them, multiple criteria inventory classification is used. In this paper, a systematic and logical approach is structured for multiple criteria inventory classification through integrating Fuzzy Delphi Method (FDM) with Fuzzy Analytic Hierarchy Process (FAHP). Fuzzy Delphi method used to identify the most important and significant criteria and, Fuzzy AHP is used to determine the relative weights of the attributes or criteria, and to classify inventories into different categories. To accredit the proposed model, it is implemented for the 351 raw materials of switch gear section of Energypac Engineering Limited (EEL), a large power engineering company of Bangladesh. Implementation results show that the proposed method can be used in inventory classification. Keywords: Multicriteria inventory classification, Fuzzy Delphi Method, fuzzy analytic hierarchy process, triangular fuzzy number.

________________________________________________________________________________________ 1. Introduction Inventory has been looked at as a major cost and source of uncertainty due to the volatility within the commodity market and demand for the value-added product. Inventory is held by manufacturing companies for a number of reasons, such as to allow for flexible production schedules and to take advantage of economies of scale when ordering stock (Nahmias, 2004). The efficient management of inventory systems is therefore a crucial element in the operation of any production or manufacturing company (Chase et al., 2006). Classification of inventory is a crucial element in the operation of any production company (Björnfot and Torjussen, 2012). Because of the huge number of inventory items in many companies, great attention is directed to inventory classification into the different classes, which consequently require the application of different management tools and policies. ABC inventory management deals with classification of the items in an inventory in decreasing order of annual dollar volume. The ABC classification process is an analysis of a range of items, such as finished products or customers into three categories: A- outstandingly important; B- of average importance; C- relatively unimportant as a basis for a control scheme. Each category can and sometimes should    be handled in a different way, with more attention being devoted to category A, less to B, and less to C (Muller, 2003). Sometimes, only one criterion is not a very efficient measure for decision-making. Therefore, multiple criteria decision making methods are used (Flores and Whybark, 1986,1987). Apart from other criteria like lead time of supply, part criticality, availability, stock out penalty costs, ordering cost, scarcity, durability, substitutability, reparability etc has been taken into consideration (Flores and Whybark, 1986,1987; Zhou and Fan, 2007). More studies have been done on multi-criteria...
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