An application of data envelopment analytic hierarchy process for supplier selection: a case study of BEKO in Turkey

• Published in: International journal of production research Vol. 45; no. 9; pp. 1973 - 2003
• Main Authors: Sevkli, Mehmet, Lenny Koh, S. C., Zaim, Selim, Demirbag, Mehmet, Tatoglu, Ekrem
• Format: Journal Article
• Language: English
• Published: London Taylor & Francis Group 01.05.2007; Washington, DC Taylor & Francis; Taylor & Francis LLC
• Subjects: Analytical hierarchy process; Appliance industry; Applied sciences; Data envelopment analysis; Decision making; Decision theory. Utility theory; Exact sciences and technology; Hierarchies; Inventory control, production control. Distribution; Logistics; Multiple criteria decision making; Operational research and scientific management; Operational research. Management science; Selection; Studies; Supplier selection; Suppliers; Supply chain; Turkey; Drawing; Operations research; Decision support system; Decision making; Analytic hierarchy process; Non parametric estimation; Modeling; Optimization; Hierarchized structure; Aggregation; Supply chain; Hierarchy; High value; Domestic appliances; Purchasing; Analytical hierarchy process; Supplier selection; Purchases; Data envelopment analysis; Logistics; Novelty; Physical Sciences
• ISSN: 0020-7543; 1366-588X
• DOI: 10.1080/00207540600957399

This paper aims to apply a hybrid method of supplier selection to a well-known Turkish company operating in the appliance industry. The data envelopment analytic hierarchy process (DEAHP) methodology developed by Ramanathan, R., (Data envelopment analysis for weight derivation and aggregation in the analytic hierarchy process. Computers and Operations Research, 2006 , 33, 1289-1307) was chosen as the survey method. In this method, the data envelopment analysis (DEA) approach is embedded into analytic hierarchy process (AHP) methodology. This research concluded that the DEAHP method outperforms the AHP method for supplier selection despite the findings that the AHP model suggested supplier 1 to be the best supplier, contradicting the suggestion made by the DEAHP model and the real action taken by BEKO in selecting supplier 2. These findings imply that DEAHP criteria reflect closer to the real optimum of the decision made. Drawing on a real case our study has supported Ramanathan's ( 2006 ) work confirming the view that the DEAHP method provides a better decision than the AHP method for supplier selection. Because the DEAHP model is relatively more cumbersome to apply, its application will be more appropriate for high-value components where stringent purchasing criteria are required. In contrast, AHP would remain to be an appropriate approach for relatively lower value components (C class). The novelty of this research lies in the application of a hybrid approach to a real industry case-the DEAHP method for supplier selection, where little has been done on this subject. This study has dealt with one of the most important subjects in supply chain management providing a better decision for supplier selection using appropriate quantitative approaches.