International Journal of Business and Finance Management Research
ISSN: 2053-1842
Vol. 3(5), pp. 44-52, May 2015
doi.org/10.33500/ijbfmr.2015.03.005



Grey theory approach in selection of the best supplier

F. Cengiz Dikmen*

Faculty of Bussines and Administration Sciences, Kocaeli University, Kocaeli-Turkey.

*To whom correspondence should be addressed. E-mail: fcdikmen@kocaeli.edu.tr.

Received 15 September, 2014; Received in revised form 20 April, 2015; Accepted 06 May, 2015.

Abstract


Keywords:
Supplier selection; Multiple attribute decision making (MADM); Grey number.


Supplier selection problem is vital for a company operating in a competitive environment. To be competitive, the company should be in an effort to improve the total supply chain performance with the partners in the supply chain. Selection of suppliers is closely related to the purchasing department apart from other parts of the company. Supplier selection is a strategic decision. Because of the strategic importance, the risk and the uncertainty it involves, it requires the participation of decision-makers from marketing, finance and from the other departments such as production in the selection process besides the purchasing department. With this aspect it is a group decision-making process. Supplier selection is a problem which includes both quantitative and qualitative criteria. Some of these measures may include uncertainty and sometimes they may be conflicting. While some of the criteria can be measured numerically, some of them can be expressed verbally as they may involve uncertainty. The problems, in which multiple criteria and sometimes conflicting objectives may exist, can be solved with AHP, ANP, DEA, TOPSIS, PROMETHEE, Maute, LP, GP methods, while integrated forms of these methods are frequently used in practice. The decision makers determine the selection of the desired supplier by making preference about the qualities of the alternatives or the suppliers. The decision-makers preferences depend on their subjective judgment. In general, the decision-makers' judgments are often vague and cannot be expressed with a numeric value. Supplier selection involves ambiguity and hence is a complex task. In this study, the solution steps of a supplier selection problem will be shown using a method which is not so widely used and may be appropriate in the process of group decision making under uncertainty. The method depends on the Grey Theory approach. The method put forward in 1982 is based on the theory of Deng and an effective method used to solve problems which involve discrete data and incomplete information.

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