Supplier Selection Modeling and Analysis in the Metal Casting Industry Using Analytical Hierarchy Process

Abstract

This study presents a supplier selection problem of a raw material using an analytical hierarchy process. In the existing process, the delivery of raw materials experienced delays and impacted the production process. Therefore, this paper aims to determine the criteria for supplier selection and provide recommendations for the best vendor to be selected from the last request for quotation document. Analytical Hierarchy Process (AHP), as a multi-criteria approach, was utilized in this research, starting from determining criteria, the weight of criteria, and the final score for each supplier. Through discussions with the company’s expert, procurement department, and users, as well as a review of the previous studies, this research defined three criteria, each consisting of three sub-criteria. The AHP approach was utilized to evaluate and determine the weights for the three criteria, yielding the following results: quality (62%), price (28%), and delivery (10%). The identified criteria, sub-criteria, and respective weights are subsequently utilized in a supplier selection scenario. Three suppliers of mild steel raw materials were evaluated using the weights of the criteria and sub-criteria obtained. Supplier 1 was selected because of having the higher alternative value of 0.602. The use of AHP in supplier selection is often impractical and contains subjectivity. Therefore, further research can be performed by integrating AHP with other methods, such as weighted scoring, to facilitate further the vendor selection process and integration with other methods, such as fuzzy logic, to reduce subjectivity.