Supplier selection model using fuzzy logic and AHP

Recent changes in manufacturing systems, such as producing in small lot sizes but in large varieties or increased competition and globalization, enforce enterprises to disintegrate their units. This organizational form called vertical disintegration includes several companies producing different components of products. The vertical disintegration helps companies to share risks, become leaner, and produce more varieties. However, the main problem area for vertically disintegrated companies is to determine reliable suppliers that they can collaborate for a long period of time. In this paper, a decision making model choosing the right suppliers is developed using analytical hierarchy process and fuzzy logic. Delivery performance, financial stability, service support and quality, and many other performance parameters are considered as decision variables. Besides quantifiable variables, non-quantifiable decision variables, such as collaboration level of suppliers, are calculated employing a fuzzy logic approach. As a result, a suitable supplier is determined and sensitivity analysis is conducted.