Supplier Selection Case Study

Topics: Decision theory, Decision making software, Decision making Pages: 13 (3782 words) Published: January 11, 2011
Applied Mathematical Modelling 31 (2007) 2475–2486

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 author. Tel.: +90 0312 231 74 00/2852; fax: +90 0312 230 84 34. E-mail address: (C. Gencer).

0307-904X/$ - see front matter Ó 2006 Elsevier Inc. All rights reserved. doi:10.1016/j.apm.2006.10.002


C. Gencer, D. Gurpinar / Applied Mathematical Modelling 31 (2007) 2475–2486 ¨

The studies about supplier selection are based on the years of 1960s. Dickson identified 23 criteria for supplier selection based on a survey of 273 purchasing manager. He showed that quality was perceived to be most important criteria followed by delivery and performance history [2]. It is never expected from a supplier being perfect, according to all supplier selection criterias. For example, a supplier product may have a high quality, but cost of the products may not be the lowest. On the other hand, another suppliers’ products cost may be the lowest, this is very good for a company, but on the same time delivery performance may be the worst. As it seen from the example, for making good decisions, supplier selection process must be handled systematically. There are many methods used in supplier selection such as cluster analysis [3], case based reasoning systems [4], statistical models [3], decision support systems [4,3], data envelopment analysis [3,1,5,6], analytic hierarchy process [7–9,3] total cost of ownership models [3,10], activity based costing [11], artificial intelligence [4,3], mathematical programming [12,6,13,2,14]. The methods used in supplier selection are intending the effectively of the purchasing decisions and implementing decision-making mechanism systematically. Gaballa [14] is the first author who applied mathematical programming to supplier selection in a real case in 1974. He used a mixed integer-programming model to formulate this decision-making problem for the Australian Post Office. There are many papers in literature about supplier selection. Some of them are: Ghodsypour and O’Brien ˘ [12,14], Zhu [13], Talluri [6], Talluri and...

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