GREY DECISION MODEL FOR SUPPLIER SELECTION IN PROCESS INDUSTRY

Transcription

1 Internatonal Journal of Operatons System and Human Resource Management Vol. 1, Nos. 1-2, January-December 2011, pp Internatonal Scence Press GREY DECISION MODEL FOR SUPPLIER SELECTION IN PROCESS INDUSTRY Ptchpoo.P.*, Venkumar.P and Raakarunakaran.S Abstract: Selecton of proper suppler to meet producton demand s a maor problem n all manufacturng and process ndustres. The procurement department conducts a suppler evaluaton on each suppler before the procurement process. Ths process s performed based on the prevous performance records of that organzaton. However these methods are less obectve and lack accurate data processng. In ths paper, a grey based decson makng approach to deal wth the suppler evaluaton and selecton n a process ndustry s proposed. The proposed model s llustrated wth the data collected n a chemcal processng ndustry, provdes acceptable results n determnng the better suppler. Key words: Suppler evaluaton; suppler selecton; grey relatonal analyss 1. INTRODUCTION The Supply Chan Management s defned as the ntegraton of actvtes to procure materals, transforms them nto ntermedate goods and fnal products, and delvers to customers. The supply chan conssts of all lnks from supplers to customers of a product. The suppler management s one of the key ssues of supply chan management because the cost of raw materals and components consttutes the man cost of a product and most of the frms have to spend consderable amount of ther sales revenues on purchasng. Hence, suppler selecton s one of the most mportant decson makng problems. The overall obectve of suppler selecton process s t o reduce purchase rsk and establsh the closeness, long-term collaboraton of relatonshps. A sutable suppler must supply hgh- qualty materals, delver proper quanttes of materals at proper tme, reduce cost, and provde excellent servces n order to satsfy what the buyer requres. Deng [3] developed the Grey theory that provdes an effectve mean to solve problems contanng uncertanty and ndetermnaton. Chh-Hung Tsa et al. [1]have developed a suppler selecton model for a garment ndustry usng grey relatonal analyss. Chng-Chow Yang and Ba-Sheng Chen [2] proposed an ntegrated model by combnng the analytcal herarchy process and grey relatonal analyss to evaluate and select the suppler for a notebook computer manufacturer. Guo-Don g L et al. [4] used the rough set theory for suppler selecton. They convert the lngustc varable assgned to the alternatves nto grey number. Based on the grey theory the supplers were ranked. 1,2,3 Department of Mechancal Engneerng, Kalasalngam Unversty (Kalasalngam Academy of Research and Educaton), Anand Nagar, Krshnankol, Tamlnadu , Inda. 1 E-mal: ptchpoo@akce.ac.n 2 E-mal:venkumar@akce.ac.n 3 E-mal: sraakarunakaran@yahoo.com

2 62 Internatonal Journal of Operatons System and Human Resource Management Wann-Yh Wu et al. [7] dscussed the use of grey mult obectve decson makng approach to select a better ste for a hyper market n a Tawanese cty. They compared ther fndngs wth the multplcatve compettve nteracton (MCI) model and found that grey approach gave the better soluton. Huaun Cao[5] developed an ntegrated grey decson model for the selecton of materal of a product. 2. SUPPLIER EVALUATIONS AND SELECTION The structure of the decson problem consdered n ths paper conssts of seven alternatves such as suppler 1, suppler 2, suppler 3, suppler 4, suppler 5, suppler 6 and suppler 7. The decson crtera are cost, supply qualty, lead tme to delvery, warranty and capacty of the suppler. Each alternatve can be evaluated n terms of the decson crtera n both qualtatve and quanttatve terms. Fgure 1 shows the methodology of suppler selecton. Fg. 1: Framework of Suppler Selecton 3. GREY SYSTEM THEORY Grey system theory was proposed by Deng [3] and t s a new mathematcal theory that was born by the concept of grey set. It s one of the effectve methods that are used to solve uncertanty problems under dscrete data and ncomplete nformaton. The maor advantage of grey theory s that t s sutable to handle both ncomplete nformaton and unclear problems. It s used as an analyss tool when there s no enough data. It was recognzed that the grey relatonal analyss s largely appled n the area proect selecton, predcton analyss and performance evaluaton etc. 4. GREY RELATIONAL ANALYSIS The Grey relatonal analyss uses nformaton from the Grey system to dynamcally compare each factor quanttatvely. The relatonal analyss suggests how to make predcton and decson, and generate reports that make suggestons for the suppler selecton. The Grey relatonal analyss s a method to analyze the relatonal grade for dscrete sequences. Ths s unlke the tradtonal statstcs

3 Grey Decson Model for Suppler Selecton n Process Industry 63 analyss handlng the relaton between varables. The statstcal analyss works wth plenty of data and the data dstrbuton must be typcal. But the Grey relatonal analyss requres less data and can analyze many factors that can overcome the dsadvantages of statstcs method. Ths procedure used n GRA conssts of three steps: () () () Generaton of referental seres. Normalzaton of data set. Calculaton of the grey relatonal coeffcent From the grey relatonal coeffcent the suppler wth larger coeffcent was selected as optmal suppler. 4.1 Generaton of Referental Seres of X 0 Table 1 shows the alternatves Vs crtera matrx for all seven supplers. The same can be represented as a matrx X. Table 1 Alternatves Vs Crtera Cost Qualty Delvery Warranty Capacty Suppler % Suppler % Suppler % Suppler % Suppler % Suppler % Suppler % X = The referental seres of X 0 s havng the optmal value for each crteron. X 0 = (2302, 0.94, 10, 4, 290) X 0 s compared wth the value of all alternatve of each suppler. 4.2 Normalzaton of Data Set The seres data n ths case can be normalzed usng two approaches: For a crtera f the larger value s better (Qualty, Warranty and Capacty) can be normalzed usng formula 1, whle for a crtera f the smaller value s better (cost and delvery) can be normalzed usng formula 2.

4 64 Internatonal Journal of Operatons System and Human Resource Management X * () = X * () = x () mn() x max() x mn() x max()() x x max() x mn() x (1) (2) Where, = 1, 2, 3, 4, 5, 6 and 7(Alternatves); = 1, 2, 3, 4 and 5 (Crtera) * () The normalzed data was tabulated n table 2 Fnd the absolute dfference between X and that s called () and the same s tabulated n table 3. X * () and 0 Table 2 Normalzed Data Cost Qualty Delvery Warranty Capacty Suppler Suppler Suppler Suppler Suppler Suppler Suppler Table 3 Absolute Dfference Cost Qualty Delvery Warranty Capacty Suppler Suppler Suppler Suppler Suppler Suppler Suppler Mn Max Calculaton of Grey Relatonal Coeffcent From the normalzed data, the grey relatonal coeffcent s calculated by usng the followng formula (3) and tabulated n table 4.

5 Grey Decson Model for Suppler Selecton n Process Industry 65 Where, mn+ ξ max γ () = () + ξ max (3) mn = mn mn(); max = max max() and ξ = dstngushed coeffcent ξε[0, 1] Table 4 Grey Relatonal Coeffcent Grey Relatonal Cost Qualty Delvery Warranty Capacty Coeffcent Suppler 1 γ Suppler 2 γ Suppler 3 γ Suppler 4 γ Suppler 5 γ Suppler 6 γ Suppler 7 γ Cheragh [6] descrbed the weghts of crtera used for suppler selecton s shown n table 5. Table 5 Relatve Weghts of Crtera Crtera Cost Qualty Delvery Warranty Capacty Relatve weght Calculaton of the Degree of the Grey Equaton Coeffcent The degree of the grey equaton coeffcent s calculated usng the formula (4) and the values were tabulated n table 6. 3 [()()] γ = 1 Γ = W (4) Table 6 Degree of Grey Equaton Coeffcent Suppler 1 Suppler 2 Suppler 3 Suppler 4 Suppler 5 Suppler 6 Suppler 7 Γ Γ Γ Γ Γ Γ Γ

6 66 Internatonal Journal of Operatons System and Human Resource Management Based on the degree of the grey equaton coeffcent the optmal suppler was selected. The prorty of the fve supplers were suppler 4 > suppler 3 > suppler 6 > suppler 2 > suppler 7 > suppler 1 > suppler 5. However, suppler 4 or 3 s the optmal suppler because of ther closer coeffcent values. 5. CONCLUSION The proposed approach s sutable to decson-makng under more uncertan envronments. Ths paper tres to propose an evaluaton method to determne the overall performance for each canddate vendor. The optmum decson can then be made based on the overall performance. The use of the proposed model can help company facltatng the decson-makng and usng a systematc approach to select the approprate suppler. REFERENCES [1] Chh-Hung Tsa, Chng-Lang Chang, and Leh Chen, Applyng Grey Relatonal Analyss to the Vendor Evaluaton Model, Internatonal Journal of The Computer, The Internet and Management, 2003, pp [2] Chng-Chow Yang and Ba-Sheng Chen, Suppler Selecton usng Combned Analytcal Herarchy Process and Grey Relatonal Analyss, Journal of Manufacturng Technology Management, 2006, 17(7), pp [3] Deng, J.L., Introducton to Grey System, Journal of Grey System, 1989, 1(1), pp [4] Guo-Don g L, Dasuke Yamaguch, and Masatake Naga, A Grey-based Rough Decsonmakng Approach to Suppler Selecton, Internatonal Journal of Advanced Manufacturng Technology, 2008, Vol. 36, pp [5] Huaun Cao, Fe Lu, Congbo L, and Chun Lu, An Integrated Method for Product Materal Selecton Consderng Envronmental Factors and a Case Study, Materals Scence Forum, 2006, Vol , pp [6] S. Hossen Cheragh, Crtcal Success Factors for Suppler Selecton: An Update, Journal of Appled Busness Research, 20(2), pp [7] Wann-Yh Wu, Chuen-Jng Ba and Omprakash K. Gupta, A Hypermarket Ste Selecton Model usng the Grey Mult-obectve Decson Method, Internatonal Journal of Logstcs Systems and Management, 2006, 2(1), pp