Journal of Materials Processing Technology 146 (2004) 365–376 AHP as a strategic decision-making tool to justify machine tool selection Mustafa Yurdakul * Department of Mechanical Engineering, Faculty of Engineering and Architecture, Gazi University, Maltepe, 06570 Ankara, Turkey Received 6 January 2003; received in revised form 24 November 2003; accepted 24 November 2003 Abstract Machine tool selection has strategic implications that contribute to the manufacturing strategy of a manufacturing organization. In such a case, it is important to identify and model the links between machine tool alternatives and manufacturing strategy. This study presents such a strategic justification tool for machine tools. With the new strategic justification tool, the evaluation of investment in machine tools can model and quantify strategic considerations. AHP and ANP are applied in calculation of the contributions of machine tool alternatives to the manufacturing strategy of a manufacturing organization. Hierarchical decision structures are formed in the application of the AHP and ANP approaches. Ranking scores which are used to rank the alternatives are obtained as outcomes of the applications. Application of the ANP approach also enabled the incorporation of interdependencies among the components of decision structures. An illustrative example is provided. The company management found the application and results satisfactory and implementable in their machine tool selection decisions. © 2003 Elsevier B.V. All rights reserved. Keywords: Machine selection; Strategic consideration; Analytic network process; Analytic hierarchy process; Manufacturing strategy; Machine characteristics 1. Introduction For manufacturing companies, one of the starting points to achieving high competitiveness in the market is the se- lection of machine tools. Generally, return on investment (ROI) method is applied in justification of machine tools [10,11,24]. Investments in machine tools are often accepted as stand-alone replacement projects, which do not improve the performance of a company enough to affect its strategic positioning against its competitors in the market [18,21]. However, the newest machine tools, namely machining centers, work independent of human operators, combine multiple machining operations performed by several conven- tional machine tools previously, and handle tool exchange, part exchange, and many activities automatically. They com- bine cost and time reducing efficiency features of specialized machines with the flexibility of conventional non-dedicated machine tools. The capability of accepting any one of a range of parts in random order provides advantages that have major implications for a firm in the market against its competitors, such that a strategic justification is necessary to incorporate * Tel.: +90-312-231-74-00x2414; fax: +90-3122308434. E-mail address: yurdakul@gazi.edu.tr (M. Yurdakul). the strategic benefits into the selection process of machine tools. In the literature, there are papers proposing models for machine tool selection problems. For example, Atmani and Lashkari [3], Tabucanon et al. [26], and Wang et al. [28] studied the machine selection problem for flexible manu- facturing systems (FMS). However, a thorough study of the strategic implications of the machine tool selection decision is not available in the literature to the best knowledge of the author. This paper is along the lines of justifying stand-alone machine tools, and it focuses on the strategic implications of the machine tool selection decision and develops a model in which the strategic benefits of the machine tool selection decision are identified and quantified. In a strategic approach, it is necessary to build a bridge between manufacturing strategy and individual machine tool options [2]. A multi-level decision hierarchy and in- termediate decision levels are required to link machine tool properties with the company’s manufacturing strategy. Fur- thermore, different types of evaluation criteria will exist in the decision hierarchy. Among the available multi-attribute approaches, only the analytic hierarchy process (AHP) ap- proach has the capabilities to combine different types of criteria in a multi-level decision structure to obtain a single score for each alternative to rank the alternatives. 0924-0136/$ – see front matter © 2003 Elsevier B.V. All rights reserved. doi:10.1016/j.jmatprotec.2003.11.026