MODIFIED AHP TO SELECT NEW SUPPLIERS IN THE INDONESIAN STEEL PIPE INDUSTRY

Abstract

The analytical hierarchy process (AHP) is not as effective and efficient as the pairwise comparison (PWC) matrix. The aim of this research is to tackle the weaknesses of the AHP and then applied them to a real-life case of new supplier selection in the Indonesian steel pipe industry. Some criteria are identified that are relevant in the Indonesian steel pipe companies to select new suppliers. A total score is calculated for each supplier and this ranking is used to identify the best one. In this research, the decision maker created the sorting of the criteria used in supplier selection. The matrix of PWC was constructed based on the sorting. Then, the weight of each criterion was calculated using AHP. The result of the method was an improvement over previous methods, because the value of the consistency ratio (CR) was zero, indicating a high degree of validity. This modified method was an improvement on the AHP, with a consistent solution without the need to repeat the calculation.

Keywords

• Analytical hierarchy process (AHP)
• Consistency ratio (CR)
• Criteria
• Pair-wise comparison (PWC) matrix
• Supplier selection