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  • Essay / Analytical Hierarchy Process Essay - 713

    For this reason and for the analysis of literature reviews, the need for GKS to include quality as one of its main criteria when it comes to analytical hierarchy process selection of suppliers in order to solve its current quality problem of its defective products. These criteria involve compromises and constitute a key issue in the supplier evaluation process since they measure supplier performance. For example, one supplier may offer inexpensive parts of slightly below average quality, while another supplier may offer higher quality parts with uncertain delivery, leading to trade-offs. In general, several quantitative and qualitative factors such as quality, price, flexibility and delivery performance should be considered to determine suitable suppliers (Bevilacqua & Petroni, 2002). However, apart from all these criteria and factors that affect supplier selection, decision making is difficult and complicated by other factors which may be tangible or intangible criteria (Lysons & Farrington, 2002). There are different supplier selection models such as linear weighting, mathematical programming, total cost of ownership and a few others available to help decision makers in their decisions regarding supplier selection. These models are capable of responding to the multi-criteria decision-making nature of supplier selection. One of the most widely used methods in linear weighting models is the Analytic Hierarchy Process (AHP). This model weights each given criterion representing the highest and least importance. The criteria scores are multiplied based on their weightings to reach a total score for each supplier by evaluating their performance to select the suppliers with the highest overall score. This tool is a multi-criteria method...... middle of paper ...... costs associated with purchasing processes throughout the entire value chain of the company (Bhutta & Huq, 2002). This approach can be used for almost any type of purchasing based on factors related to the type of product or service and therefore can be used to value and categorize suppliers. Most companies that use this approach to measure and develop an accurate purchasing process and use it as a tool to evaluate good suppliers (Mattson, 2000). This model can be useful to companies that are very interested in considering cost factors, which is why TCO analysis can be implemented as a tool in their purchasing perspective (Haq & Kannan, 2006 ). However, each model has its own strengths, limitations, certain underlying assumptions and unique perspectives. Thus, no single model can address all the concerns a decision maker might have..