An Interspersed Approach using fuzzy AHP and Taguchi Loss Functions for Supplier Evaluation and Selection
Choosing a vendor is one of the most important and necessary activities in SCM. The goal of this process is to find suppliers who have the most suitable features to suit the customer's needs. This study develops a comprehensive approach to assess and select suppliers using fuzzy AHP and Taguchi loss functions. Analytical results show that the proposed approach is effective in situations of uncertainty when choosing a supplier. The decision maker determines the destination value and stipulation limits for each grade of benefits and risks. Weight loss scores are calculated as importance ratings assigned to the decision maker's benefit / risk categories. By this analysis, each supplier receives a weighted loss score for all relevant benefit categories and a weighted loss score for all risk categories. To achieve the same measurement, the above weight loss estimates are combined and then used to rank the same total loss rate for each provider. The provider with the highest rating (minimum risk assessment) is selected to perform the outsourcing function. The numerical experiment is presented to illustrate the application of the proposed method.