A customizable, multi-stage multi-criteria decision analysis approach for material-supplier selection problem in SMEs : a case study of insulated housing products

Abstract

This research develops a multi-stage multiple criteria decision making (MCDM) approach for combined supplier-selection, material selection problems. The method has been exemplified through an industrial case study on the development of insulated skirting products. Namely, a Canadian distribution company has been long supplying the Canadian market with skirting products for manufactured homes, but recently has had issues with their overseas material supplier, particularly due to increased exchange rates. Hence, it has desired to shift their supply stream to a local manufacturer. There exist a large number of potential manufacturers that would be suitable for this new partnership. It has been crucial to scrutinize the decision alternatives systematically in order to rank and allow for the optimal selection of the supplier(s) and their skirting products. When manufacturing suppliers are changed for a business, a natural consequence is that the end product’s material properties would also change, hence the need for a rigorous material testing as part of a multiple criteria decision making process. A step-by-step procedure has been developed here that combines supplier and material selection sub-decisions in order to find the most suitable alternative, using a hybrid of multiple criteria optimization techniques. The procedure accounts for the required decision accuracy and time-sensitivity measures that a production manager would face under different decision scenarios. The case study shows that if the company’s business situation is time-critical and the decision accuracy may not be of primary concern, a simple non-compensatory MCDM method would suffice. Otherwise, more structured compensatory methods should be employed. The criteria proposed for the case study have been selected based on the company staff feedback. The presented methodology is customizable and may be applied to other similar supplier decision making problems. Correlation analysis has also performed to ensure the independence of the quantitative material criteria, as required per assumptions of the standard MCDM methods.Applied Science, Faculty ofEngineering, School of (Okanagan)Graduat