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Supplier Selectio

through AHP

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Supplier Selection Example

Suppliers: A, B, and C

Criteria: product cost, product quality, service, and deli

PREFERENCE LEVEL NUMERICAL

Equally preferred 1

Equally to moderately preferred 2

Moderately preferred 3

Moderately to strongly preferred 4

Strongly preferred 5

Strongly to very strongly preferred 6

Very strongly preferred 7

Very strongly to extremely preferred 8

Extremely preferred 9

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The Southcorp Company

COST QUALITY SERVICE D

A B C

A 1 3 2

B 1/3 1 1/5

C 1/2 5 1

A B C

A 1 6 1/3

B 1/6 1 1/9

C 3 9 1

A B C

A 1 1/3 1

B 3 1 7

C 1 1/7 1

A

A 1

B 3

C 2

Pairwise comparison

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Analytical Hierarchy Process

1. Establish preferences for each alternative f

criteria2. Assign importance scores to each criteria

3. Preferences and importance scores are co

for final selection

Ranks decision alternatives and selects the b

Allows consideration of multiple criteria

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COST QUALITY SERVICE DE

A B CA 1 3 2

B 1/3 1 1/5

C 1/2 5 1

A B CA 1 6 1/3

B 1/6 1 1/9

C 3 9 1

A B C

A 1 1/3 1

B 3 1 7

C 1 1/7 1

A

A 1

B 3

C 2

Pairwise comparison

COST

SUPPLIER A B C

A 1 3 2

B 1/3 1 1/5

C 1/2 5 1

11/6 9 16/5

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COST QUALITY SERVICE DE

A B C

A 1 3 2

B 1/3 1 1/5

C 1/2 5 1

A B C

A 1 6 1/3

B 1/6 1 1/9

C 3 9 1

A B C

A 1 1/3 1

B 3 1 7

C 1 1/7 1

A

A 1

B 3

C 2

Pairwise comparison

COST

SUPPLIER A B C

A 6/11 3/9 5/8

B 2/11 1/9 1/16

C 3/11 5/9 5/16

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COST QUALITY SERVICE D

A B C

A 1 3 2

B 1/3 1 1/5

C 1/2 5 1

A B C

A 1 6 1/3

B 1/6 1 1/9

C 3 9 1

A B C

A 1 1/3 1

B 3 1 7

C 1 1/7 1

A

A 1

B 3

C 2

Pairwise comparison

COST

SUPPLIER A B C Row Av

A 0.5455 0.3333 0.6250 0.5012

B 0.1818 0.1111 0.0625 0.1185

C 0.2727 0.5556 0.3125 0.3803

1.0000

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Summarized preferences

CRITERIA

SUPPLIER Cost Qual i ty Service Del ive

A 0.5012 0.2819 0.1790 0.156

B 0.1185 0.0598 0.6850 0.619

C 0.3803 0.6583 0.1360 0.224

Pairwise ranking of importance

CRITERIA COST QUALITY SERVICE DELIV

Cost 1 1/5 3 4

Quality 5 1 9 7

Service 1/3 1/9 1 2

Delivery 1/4 1/7 1/2 1

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Summarized preferences

CRITERIA COST QUALITY SERVICE DELIVERY

Cost 0.1519 0.1375 0.2222 0.2857 Quality 0.7595 0.6878 0.6667 0.5000

Service 0.0506 0.0764 0.0741 0.1429

Delivery 0.0380 0.0983 0.0370 0.0714

CRITERIA

Cost 0.1993

Quality 0.6535

Service 0.0860

Delivery 0.0612

Preference vector

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Overall score

C

Cost

Quality

Service

Delivery

CRITERIA

Cost Qual i ty Service Delivery

A 0.5012 0.2819 0.1790 0.1561

B 0.1185 0.0598 0.6850 0.6196

C 0.3803 0.6583 0.1360 0.2243

Supplier A score = 0.1993(0.5012) + 0.6535(0.1819) +0.0860(0.1790) + 0.0612(0.1561)

= 0.3091

Supplier B score = 0.1595

Supplier C score = 0.5314Select Supplier C

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AHP with Excel

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AHP with Excel

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AHP with Excel