Supplier Selection Case Study

Applied Mathematical Modelling 31 (2007) 2475–2486 www.elsevier.com/locate/apm

Analytic network process in supplier selection: A case study in an electronic firm
Cevriye Gencer *, Didem Gurpinar ¨
Gazi University, Faculty of Engineering and Architecture, Department of Industrial Engineering, 06570 Maltepe/Ankara, Turkey Received 1 November 2005; received in revised form 1 August 2006; accepted 9 October 2006 Available online 8 December 2006

Abstract Supplier selection, which is the first step of the activities in the product realization process starting from the purchasing of material till to the end of delivering the products, is evaluated as a critical factor for the companies desiring to be successful in nowadays competition conditions. With the scope of this paper, supplier selection was considered as a multi criteria decision problem. A model aiming the usage of analytic network process (ANP) in supplier selection is developed owning to the evaluation of the relations between supplier selection criterias in a feedback systematic. The proposed model is implemented in a company of electronic. Ó 2006 Elsevier Inc. All rights reserved.
Keywords: Supplier selection; Analytic network process; Multi criteria decision making; Purchasing

1. Introduction Purchasing decisions have a major impact on companies, because of this fact systematic methods must be followed up. There are two main reasons for this [1]: • First in many companies, the cost of the purchased goods and services accounts for more then 60% of the cost of goods sold. • Second, over 50% of all quality defects can be traced back to purchase material. Since 1960s, supplier selection criterias and suppliers performance have been a focal point of many researchers. While the traditional vendor evaluation methods primarily considered financial measures in the decision making process, more recent emphasis on the incorporation of multiple vendor criteria into evaluation process [2].

*

Corresponding

References: [1] E.K. Lee, Development of a Supplier Selection and Management System and Safety Stock Policies in Supply Chain, Thesis for the Degree of Doctor of Philosophy, Department of Industrial Engineering Graduate School, Korea University, 2001, pp. 45–55. [2] S. Talluri, R. Narasimhan, Vendor evaluation with performance variability: a max–min approach, Eur. J. Operat. Res. 146 (2003) 543–552. [3] L. Boer, E. Labro, P. Morlacchi, A review of methods supporting supplier selection, Eur. J. Purchasing Supply Manage 7 (2001) 75– 89. [4] K.L. Choy, W.B. Lee, V. Lo, Design of a case based intelligent supplier relationship management system – the integration of supplier rating system and product coding system, Expert Syst. Appl. 25 (2003) 87–100. [5] C.H. Weber, J.R. Current, A. Desai, Non-cooperative negotiation strategies for vendor selection, Eur. J. Operat. Res. 108 (1998) 208– 223. [6] S. Talluri, A buyer–seller game model for selection and negotiation of purchasing bids, Eur. J. Operat. Res. 143 (2002) 171–180. ˘ [7] G. Barabarosoglu, T. Yazgac, An application of the analytic hierarchy process to the supplier selection problem, Prod. Inventory ¸ Manage. J. First Quarter (1997) 14–21. [8] M.C.Y. Tam, V.M.R. Tummala, An application of the AHP in vendor selection of a telecommunications system. OMEGA, Int. J. Manage. Sci. 29 (2001) 171–182. ˘ [9] M. Dagdeviren, T. Eren, Tedarikci Firma Seciminde Analitik Hiyerars i Prosesi ve 0-1 Hedef Programlama Yontemlerinin ¸ ¸ ß ¨ ¨ Kullanılması, Gazi Universitesi Muhendislik Mimarlık Fakultesi Dergisi 16 (2) (2001) 41–52. ¨ ¨ [10] Z. Degraeve, E. Labro, F. Roodhooft, An evaluation of vendor selection models from a total cost of ownership perspective, Eur. J. Operat. Res. 125 (2000) 34–58. [11] F. Roodhooft, J. Konings, Vendor selection and evaluation an activity based costing approach, Eur. J. Operat. Res. 96 (1996) 97–102. [12] S.H. Ghodspour, C. O’Brien, A decision support system for supplier selection using an integrated analytic hierarchy process and linear programming, Int. J. Prod. Econ. 56–57 (1998) 199–212. [13] J. Zhu, A buyer–seller game model for selection and negotiation of purchasing bids: extensions and new models, Eur. J. Operat. Res. 134 (2004) 150–156. [14] S.H. Ghodspour, C. O’Brien, The total cost of logistics in supplier selection. Under conditions of multiple sourcing. multiple criteria and capacity constraint, Int. J. Prod. Econ. 73 (2001) 15–27. [15] Thomas L. Saaty, The Analytic Hierarchy Process, RWS Publications, Pittsburg, 1990, pp. 184–192. [16] L.T. Saaty. Fundamentals of the Analytic Network Process. ISAHP Japan, 1999, pp. 12–14. [17] S.H. Chung, A.H.I. Lee, W.L. Pearn, Analytic network process approach for product mix planning in semiconductor fabricator, Int. J. Prod. Econ. 96 (2005) 15–36. [18] L. Meade, J. Sarkis, Strategic analysis of logistics and supply chain management systems using the analytical network process, Transp. Res. – E. 34 (3) (1998) 201–215. ¨ [19] M. Buyukyazıcı, Analitik Sebeke Prosesi, Hacettepe Universitesi Fen Bilimleri Enstitusu, Ankara, 2000, pp. 41–47. ß ¨ ¨ ¨ ¨ _ ¨ ˘ [20] A. Erkiletlioglu, Askeri Lojistik Politikalarının Belirlenmesinde Analitik Sebeke Yontemi, Istanbul Teknik Universitesi Fen Bilimleri ß ¨ Enstitusu, Istanbul, 2000, pp. 9–21. ¨ ¨ _ [21] Saaty L. Thomas, Niemira P. Michael, An analytical network process model for financial-crisis forecasting, Int. J. Forecasting 20 (2004) 573–587. [22] M. Yurdakul, AHP as strategic decision making tool to justify machine tool selection, J. Mater. Process. Technol. 146 (2004) 365–376. [23] Ulutas H. Berna, Determination of appropriate energy policy for Turkey, Energy 30 (2005) 1146–1161. ß [24] Y.F. Partovi, An analytic model for locating facilities strategically, OMEGA, Int. J. Manage. Sci. 34 (2006) 41–55. [25] Lee, W. Jin, Kim H. Soung, Using analytic network process and goal programming for independent information system project selection, Comput. Operat. Res. 27 (1998) 367–382. [26] E.E. Karsak, S. Sozer, E.S. Alptekin, Product planning in quality function deployment using a combined analytic network process and goal programming approach, Comput. Ind. Eng. 44 (2002) 171–190. [27] J.A. Momoh, J.Z. Zhu, Application of AHP/ANP to unit commitment in the deregulated power industry, IEEE International Conference on Systems, Man, and Cybernetics 1 (1998) 817–822. [28] L.M. Meade, A. Presley, R&D project selection using the analytic network process, IEEE Transactions on Engineering Management 49 (1) (2002) 59–66.