Multi-criteria Group Decision Supplier Selection Problem using Fuzzy TOPSIS Based Approch Akram ZOUGGARI and Lyes BENYOUCEF INRIA Nancy-grand Est, COSTEAM Project, Bat. A, Ile du Saulcy, 57000, Metz, France {akram.zouggari, lyes.benyoucef}@inria.fr Abstract This paper presents a new decision making approach for group multi-criteria supplier selection problem, which clubs supplier selection process with order allocation for dynamic supply chains to cope market variations. More specifically, the developed approach imitates the knowledge acquisition and manipulation in a manner similar to the decision makers who have gathered considerable knowledge and expertise in procurement domain. Fuzzy-AHP method is used first for supplier selection through four classes (CLASS I: Performance strategy, CLASS II: Quality of service, CLASS III: Innovation and CLASS IV: Risk), which are qualitatively meaningful. Thereafter, using simulation based fuzzy TOPSIS method, the criteria application is quantitatively evaluated for order allocation among the selected suppliers. As a result, the approach generates decision-making knowledge, and thereafter, the developed combination of rules for order allocation can easily be interpreted, adopted and at the same time if necessary, modified by decision makers. To demonstrate the applicability of the proposed approach, an illustrative example is presented and the results analyzed. Keywords: Supplier selection, fuzzy AHP, fuzzy TOPSIS, knowledge, multi-criteria, group decision. 1. Introduction Nowadays, among various supply chain-related activities, the procurement of goods and services is playing an increasingly important role as a result of the globalisation of the economy. Purchasing expenses can consume as much as 60% or more of business’ revenues. In many settings, supplier selection is a crucial strategic decision that has long-term impacts on a company’s profitability and efficiency. Generally for most of the procurement/purchasing departments, supplier selection is considered as a five- phase process starting from the realization of the need for a new supplier; determination and formulation of decision criteria; pre-qualification (initial screening and drawing up a shortlist of potential suppliers from a large list); final supplier selection; to the monitoring of the suppliers selected (i.e., continuous evaluation and assessment). In order to ensure an uninterrupted supply of products, it has been observed that more than one supplier is normally available for each product. Periodic evaluation of supplier quality is carried out to ensure relevant quality standards for all incoming products are met. The key objective is to purchase the right quality of product in the right quantity from the right source at the right time and at reasonable price. This paper presents a novel approach for automatic fuzzy based knowledge acquisition, which clubs supplier selection process with order allocation. More specifically, the developed approach imitates the knowledge acquisition and manipulation in a manner similar to the decision makers who have gathered considerable knowledge and expertise in procurement domain. As per this concept, those decision criteria for supplier selection are considered first through four classes (CLASS I: Performance strategy, CLASS II: Quality of service, CLASS III: Innovation and CLASS IV: Risk), which are qualitatively meaningful. Thereafter, using fuzzy logic, the criteria application is quantitatively evaluated. As a result, the approach generates decision-making knowledge, and thereafter, the developed combination of rules for supplier selection with order allocation can easily be interpreted, adopted and at the same time if necessary, modified by decision makers. The rest of the paper is organized as follows: Section 2 presents state of art of supplier selection problem. Section 3 presents problem description and proposed approach. Section 4 illustrates some of the experimental results. Section 5concludes the paper with some perspectives. 2. Supplier selection problem: State of the art 2.1. Factors impacting supplier selection decisions A number of research works have been published in the last decades emphasized the strategic importance of the supplier selection process and evaluated the relative importance of the most used selection criteria and sub- criteria. Van der Rhee et al. [10] explored how executives’ trade-off amongst various dimensions when selecting a supplier. An empirical study is presented to assess the marginal trade-off for cost, delivery performance, flexibility, and value-added service/support in a supplier selection process using a market utility-based approach (DCA). Specifically, the three objectives are: (i) How do managers trade-off between price and other competitive criteria in supplier selection process, given acceptable quality?, (ii) What is the relative importance of value-added service and support when selecting suppliers, given acceptable quality?, and How do trade-offs in the supplier selection EUSFLAT-LFA 2011 July 2011 Aix-les-Bains, France © 2011. The authors - Published by Atlantis Press 628