The potential benefits for supply chain management by utilizing AHP Dissertation

The potential benefits for supply chain management by utilizing AHP for supplier selection - Dissertation Example 1993). Under such circumstances, the purchasing department plays an important role in cost reduction, of which supplier selection is an important part. To illustrate, an issue has been brought up in the case study. Leading companies need to maintain their position in market; however, cost of production constitutes the problem of company expanding or technology innovation. Supplier selection is a multi-criteria problem which includes both quantitative and qualitative factors. (Ghodsypour, S. H.,1996). The companies that still continue with the traditional method of supplier selection may lose competitiveness. Acknowledgement First and foremost, I would like to show my deepest gratitude to my supervisor, Dr. Louis Knight, a respectable, responsible and resourceful scholar, who has provided me with valuable guidance in every stage of the writing of this thesis. Without her enlightening instruction, impressive kindness and patience, I could not have completed my thesis. I shall extend my thanks to Felix, Li for all his kindness and help. I would also like to thank all my teachers who have helped me to develop the fundamental and essential academic competence. My sincere appreciation also goes to Mary, Liu, for doing the English typographic and corrections. Dr. Louis Knight, Aston University, Engineering and Applied Science. L.KNIGHT2@aston.ac.uk Felix Li, University of Warwick, Statistics department. felixli@hotmail.ac.uk Mary Liu, Olympia Education Service LTD. lyqlyq1688@hotmail.com Contents Abstract 3 Acknowledgement 4 Table of Figures 7 Photo credit: 7 List of Tables 8 Chapter 1: Introduction 9 1.1 Introduction 9 1.2 Background 3 Chapter 2:Literature review 4 2.1 Supplier selection in SCM 4 2.1.1 Benefits of supply chain management 4 2.1.2 Responsibilities of the purchasing department 5 2.1.3 Supplier selection: Criteria affect choosing suppliers in supply chain management 8 2.1.4 Supplier performance of Tsingtao Company 10 2.2 Analytical Hierarchal Process 11 2.2.1 Analytic Hierarchy Process - Concept 11 2.2.2 AHP in supplier selection 12 Chapter 3:Methodology 13 3.1 Research objective 13 3.2 Research design 13 3.3 Data collection 13 3.4 Research method 17 3.4.1 Case study (why & how) 17 3.4.2 Analytic Hierarchy Process (AHP) 19 Chapter 4:Findings 21 4.1Characteristics of purchasing supply chain in beer industry 21 4.2 Supplier selection using AHP analysis 27 4.2.1 Building the supplier evaluation criteria system 27 4.2.2 Building judgment matrix 27 4.2.3 Defining first-level criteria weights 28 1.Calculating maximum eigenvalue of the judging matrix 29 2.B is the judgment matrix B= (b) nn 29 3.Calculate consistency test 29 4.From the table of average and random consistency criteria, it can find the necessary average and random consistency criteria RI. 29 Chapter 5:Main Findings and discussion 33 5.1 Findings 33 5.2 Discussion 35 5.2.1 35 5.2.2 Sensitivity analysis 35 Chapter 6:Conclusion 36 36 Reference 37 Appendixes 42 Table of Figures Figure 1: Current method of supplier selection 15 Figure 2: Agenda of having suppliers 16 Figure 3: Definition of terms 16 Figure 4: Criteria for supplier elevation 27 Photo credit: Cover page: http://thenextwavefutures.files.wordpress.com/2007/09/shipping_containers.jpg List of Tables Table 1: Supplier evaluation