Evaluation and Selection of International Supplier, Underscoring Risk Factors

• Published in: Mudīrīyyat-i tawlīd va ʻamalīyyāt 2014-05, Vol.5 (1), p.53-70
• Main Author: seyed Mohammad Ali Khatami Firouzabadi
• Format: Article
• Language: per
• Subjects: Linear programming; Multiple criteria decision making; Risk factors; Uncertain Analytical hierarchy process
• ISSN: 2251-6409; 2423-6950

This paper evaluates the decision making process for import complete manufactured pieces versus import of partial pieces to assemble in Iran, taking into account the risk factors for a manufacturing company. Since this sort of decision making confront with several risks, it is necessary to establish a process for finding the risks associated with this kind of problems in order to decrease the effects of these risks in the process. Since the problem is classified as a Multiple Criteria Decision Making (MCDM) problem, Uncertain Analytical Hierarchy Process (UAHP) was used to find the most attractive alternative. Because the alternatives were identified from the first point, a bottom-up procedure was used to organize the hierarchy. In initial stage, the attributes which distinct from the alternatives were obtained by literature review and experts' interviews. Then the attributes were grouped to upper level to establish the criteria. Three criteria were found from this stage. The criteria were product, partners, and environment which they encompassed 12 attributes. Forming the hierarchy and doing the uncertain pairwised comparisons, which considers a range of numbers instead of one single number for declaring the preference between two factors, a Linear Programming (LP) model with two types of objective functions were formed for each individual alternative. Each single LP model can express the maximum and minimum value of each individual alternative. The research's results indicate the most appropriate alternative is to import the final product from India. The last preferred one was to import the parts of the final product from India. This study can be a suitable framework in supply chain management and purchasing decisions and risk evaluations because the major parts of manufacturing activities is always to decide about the selection of most preferred strategies for companies.