Multi-criteria Evaluation And Ranking Of Supplier Risks

Decision making has been pestering all forms of organizations – larger and small alike.In this thesis,we develop a simple decision support tool for a small-size retailer company to rate and rank suppliers considering their supply risks.In particular,we interviewed four managers of the company,constructed a hierarchy of supply factors,and applied both Analytic Hierarchy Process(AHP)and Analytic Network Process(ANP)to rate suppliers based on their characteristics of those risk factors.Moreover,we validated the model of AHP and ANP by both eliciting each manager's understanding of the various criteria and asking them to rank order the suppliers directly in terms of their overall risks.Multiple methods were adopted to aggregate their overall rankings and the consensus ranking was compared to the ratings obtained from AHP and ANP.In conclusion,the results of ANP were more consistent with the consensus rankings than AHP.Although the AHP/ANP results and the direct rank orderings are generally different,the systematic process we proposed is valuable to the managers at the company for both preference construction and convergent validation.