An Integrated AHP-TOPSIS Approach in Supplier Selection: An Automotive Industry as a Case Study

Abstract

A multi-criteria problem is the one which is evaluated against qualitative and quantitative factors. A practical example of such problem is supplier selection. A supplier selection problem deals with both tangible and intangible factors to select the best suppliers. It becomes more complicated in presence of constraints such as capacity, cost, quality etc. in such circumstances, manager faces two problems: (1) who are the best suppliers (2) how much quantity should be purchased from each selected supplier. The work addressed in this paper describes an integration of Analytical Hierarchy Process (AHP), Technique For Order Preference By Similarity To Ideal Solution (TOPSIS) and linear programming to solve a multi-criteria supplier selection problem where both qualitative and quantitative factors are taken into account. While AHP qualitatively determine the weights assigned to different criteria, TOPSIS determines ranking of suppliers and linear programming mathematically determine the optimal order quantity from chosen suppliers by taking the output of TOPSIS as its input. A case study of an automobile company is presented and future scope is discussed.