Multi-criteria decision making approach for vendor selection

Abstract

In the present study an efficient Multi-Criteria Decision Making (MCDM) approach has been proposed for quality evaluation and performance appraisal in vendor
selection. Vendor selection is a Multi-Criteria Decision Making (MCDM) problem influenced by multiple performance criteria/attributes. These criteria attributes
may be both qualitative as well as quantitative. Qualitative criteria estimates are generally based on previous experience and expert opinion on a suitable
conversion scale (Likert Scale). This conversion is based on human judgment;therefore, predicted result may not be accurate always because the method doesn’t explore real data. These are analyzed using AHP, QFD, Fuzzy
techniques etc. reported in literature. In solution of MCDM problems there should be a common trend is to convert quantitative criteria values into an equivalent
single performance index called Multi-attribute Performance Index (MPI). Benchmarking and selection of the best alternative can be made in accordance with the MPI values of all the alternatives. In this context, present study highlights application of VIKOR method adapted from MCDM for utilizing quantitative real performance estimate scores. Detail methodology of VIKOR method has been
illustrated in this reporting through a case study.