New integrated approach to the problem of ranking and supplier selection under uncertainties

Abstract

The problem of ranking and supplier selection in the uncertain environment is part of a purchasing plan and its relationship has a critical effect on the competitive advantage (high-quality products at lower cost with higher customer satisfaction) of each industrial organization. The considered problem can be stated as a multicriteria decision problem which includes both quantitative and qualitative criteria. The criteria present supplier performances which are defined by the purchasing Management Team depending on the size of industrial organizations and on production type. In this paper, the Management Team, using European Union (EU) recommendations, made a choice of criteria for supplier evaluation. The fuzzy rating weights of each pair of the considered criteria and uncertain criteria values are described by linguistic expressions which are modelled by triangular fuzzy numbers. The fuzzy extent approach for the synthetic extent values of the pairwise comparison for handling fuzzy analytic hierarchical process (AHP) is used to calculate the weight vector. The extension of the fuzzy technique for order preference by similarity to ideal solution (TOPSIS) is applied to rank the suppliers. The proposed model is illustrated by an example. It is shown that the developed model is highly suitable as a decision-making tool for reaching decisions about supplier selection.