Selection of Vendor Based on Intuitionistic Fuzzy Analytical Hierarchy Process

Business environment is characterized by greater domestic and international competitive position in the global market. Vendors play a key role in achieving the so-called corporate competition. It is not easy however to identify good vendors because evaluation is based on multiple criteria. In practice, for VSP most of the input information about the criteria is not known precisely. Intuitionistic fuzzy set is an extension of the classical fuzzy set theory (FST), which is a suitable way to deal with impreciseness. In other words, the application of intuitionistic fuzzy sets instead of fuzzy sets means the introduction of another degree of freedom called nonmembership function into the set description. In this paper, we proposed a triangular intuitionistic fuzzy number based approach for the vendor selection problem using analytical hierarchy process. The crisp data of the vendors is represented in the form of triangular intuitionistic fuzzy numbers. By applying AHP which involves decomposition, pairwise comparison, and deriving priorities for the various levels of the hierarchy, an overall crisp priority is obtained for ranking the best vendor. A numerical example illustrates our method. Lastly a sensitivity analysis is performed to find the most critical criterion on the basis of which vendor is selected. 1. Introduction 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 and Stainer [1]). In high technology firms, purchased materials and services represent up to 80% of total product cost (Weber et al. [2]). 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 which significantly reduces the purchasing costs and improves corporate competitiveness (Ghodsypour and O’Brien [3]). The objective of supplier selection is to identify suitable supplier on the basis of comparison of suppliers using a common set of criteria and measures. The first study on vendor selection was carried by Dickson [4] who identified 23 important evaluation criteria for supplier selection. Later Weber et al. reviewed, classified, and addressed the supplier selection problem and De Boer et al. [5] identified four stages for supplier selection including definition of the problem, formulation of criteria, qualification, and final selection, respectively. A number of methodologies have been