Fuzzy AHP approach for supplier selection in a washing machine company Ozcan Kilincci ⇑ , Suzan Aslı Onal Dokuz Eylul University, Dept. of Industrial Engineering, Izmir, Turkey article info Keywords: Multi-criteria decision-making Supplier selection Analytic hierarchy process Fuzzy analytic hierarchy process abstract Supplier selection process has gained importance recently, since the cost of raw materials and component parts constitutes the main cost of a product and most of the firms have to spend considerable amount of their revenues on purchasing. Supplier selection is one of the most important decision making problems including both qualitative and quantitative factors to identify suppliers with the highest potential for meeting a firm’s needs consistently and at an acceptable cost. In this study, supplier selection problem of a well-known washing machine company in Turkey is investigated and a fuzzy analytic hierarchy pro- cess based methodology is used to select the best supplier firm providing the most customer satisfaction for the criteria determined. After the main attributes and sub-attributes for supplier selection are defined to design the hierarchy structure, the weights of them and alternatives are calculated using fuzzy analytic hierarchy process approach. The supplier with the highest priority weight is selected as the best supplier. Macros in MS Excel are written to calculate the priority weights of the alternatives based on the question- naire forms used to facilitate comparisons of main attributes, sub-attributes and alternatives. Ó 2011 Elsevier Ltd. All rights reserved. 1. Introduction Increases and varieties of customer demands, advances of re- cent technologies in communication and information systems, competition in global environment, decreases in governmental regulations and increases in environmental consciousness have forced companies for focusing on supply chain management (Tracey & Tan, 2001). The ‘‘supply chain management’’ term de- fines the integration of activities to procure materials, transforms them into intermediate goods and final products, and delivers to customers. The supply chain consists of all links from suppliers to customers of a product. Goffin, Szwejczewski, and New (1997) have stated that supplier management is one of the key issues of supply chain management because the cost of raw materials and component parts constitutes the main cost of a product and most of the firms have to spend considerable amount of their sales rev- enues on purchasing. In most industries the cost of raw materials and component parts constitutes the main cost of a product, such that in some cases it can account for up to 70% (Ghobadian, Stainer, & Kiss, 1993). In high technology firms, purchased materials and services represent up to 80% of total product cost (Weber, Current, & Benton, 1991). Thus the purchasing department can play a key role in an organization’s efficiency and effectiveness since the department has a direct effect on cost reduction, profitability and flexibility of a company by selecting the right suppliers signifi- cantly reduces the purchasing costs and improves corporate com- petitiveness (Ghodsypour & O’Brien, 2001). Supplier selection is a multi-criteria problem which includes both qualitative and quantitative factors. In order to select the best suppliers it is necessary to make a trade off between these tangible and intangible factors some of which may conflict (Ghodsypour & O’Brien, 1998). The objective of supplier selection is to identify suppliers with the highest potential for meeting a firm’s needs con- sistently and at an acceptable cost. Selection is a broad comparison of suppliers using a common set of criteria and measures. How- ever, the level of detail used for examining potential suppliers may vary depending on a firm’s needs. Although analytical hierarchy process (AHP) is widely preferred for solving multi-criteria decision-making problems in real situa- tions, it is insufficient to explain uncertain conditions in especially pair-wise comparison stage. Most of human’s judgments are not represented as exact numbers. Since some of the evaluation crite- ria are subjective and qualitative in nature, it is very difficult for the decision-maker to express the preferences using exact numer- ical values and to provide exact pair-wise comparison judgments (Chan & Kumar, 2007). Fuzzy evaluations in decision making pro- cess are very useful to tackle this disadvantage of AHP. To select the best supplier for a washing machine company, this study proposes a fuzzy extended AHP (FEAHP) approach using tri- angular fuzzy numbers to represent decision makers’ comparison judgments and extent analysis method to decide the final priority of different decision criteria. The presented fuzzy AHP uses the lin- guistic variables and triangular fuzzy numbers as a pair-wise com- parison scale for deriving the priorities of different selection 0957-4174/$ - see front matter Ó 2011 Elsevier Ltd. All rights reserved. doi:10.1016/j.eswa.2011.01.159 ⇑ Corresponding author. E-mail address: ozcan.kilincci@deu.edu.tr (O. Kilincci). Expert Systems with Applications 38 (2011) 9656–9664 Contents lists available at ScienceDirect Expert Systems with Applications journal homepage: www.elsevier.com/locate/eswa