Chapter One

INTRODUCTION
We are all fundamentally decision makers. Everything we do consciously or unconsciously is the result of some decision. The information we gather is to help us understand occurrences, in order to develop good judgments to make decisions about these occurrences. Not all information is useful for improving our understanding and judgments. If we only make decisions intuitively, we are inclined to believe that all kinds of information are useful and the larger the quantity, the better. But that is not true. There are numerous examples, which show that too much information is as bad as little information. Knowing more does not guarantee that we understand better as illustrated by some authors writing Expert after expert missed the revolutionary significance of what Darwin had collected. Darwin, who knew less, somehow understood more. To make a decision we need to know the problem, the need and purpose of the decision, the criteria of the decision, their sub-criteria, stakeholders and groups affected and the alternative actions to take. We then try to determine the best alternative, or in the case of resource allocation, we need priorities for the alternatives to allocate their appropriate share of the resources. Decision making, for which we gather most of our information, has become a mathematical science today. It formalizes the thinking we use so that, what we have to do to make better decisions is transparent in all its aspects. We need to have some fundamental understanding of this most valuable process that nature endowed us with, to make it possible for us to make choices that help us survive. Decision making involves many criteria and subcriteria used to rank the alternatives of a decision. Not only does one need to create priorities for the alternatives with respect to the criteria or subcriteria in terms of which they need to be evaluated, but also for the criteria in terms of a higher goal, or if they depend on the alternatives, then in terms of the alternatives themselves. The criteria may be intangible, and have no measurements to serve as a guide to rank the alternatives, and creating priorities for the criteria themselves in order to weigh the priorities of the alternatives and add over all the criteria to obtain the desired overall ranks of the alternatives is a challenging task. The measurement of intangible factors in decisions has for a long time, defied human understanding. Number and measurement are the core of mathematics and mathematics is essential to science. So far, mathematics has assumed that all things can be assigned numbers from minus infinity to plus infinity in some way, and all mathematical modelling of reality has been described in this way by using axes and geometry. Naturally, all this is predicated on the assumption that one has the essential factors and all these factors are measurable. But there are many more important factors that we do not know how to measure than there are ones that we have measurements for. Knowing how to measure such factors could conceivably lead to new and important theories that rely on many more factors for their explanations. After all, in an interdependent universe everything depends on everything else. Is this just a platitude or

is there some truth behind it? If we knew how to measure intangibles, much wider room would be open to interpret everything in terms of many more factors than we have been able to do so far scientifically. One thing is clear, numerical measurement must be interpreted for meaning and usefulness according to its priority to serve our values in a particular decision. It does not have the same priority for all problems. Its importance is relative. Therefore, we need to learn about how to derive relative priorities in decision making.

Figure 1.1: Day to Day Decision Making

1.1 BACKGROUND
There are two possible ways to learn about anything an object, a feeling or an idea. The first is to examine and study it in itself to the extent that it has various properties, synthesize the findings and draw conclusions from such observations about it. The second is to study that entity relative to other similar entities and relate it to them by making comparisons. The cognitive psychologist Blumenthal (1977) wrote that Absolute judgment is the identification of the magnitude of some simple stimulus...whereas comparative judgment is the identification of some relation between two stimuli both present to the observer. Absolute judgment involves the relation between a single stimulus and some information held in short-term memory, information about some former comparison stimuli or

about some previously experienced measurement scale... To make the judgment, a person must compare an immediate impression with impression in memory of similar stimuli. Using judgments has been considered to be a questionable practice when objectivity is the norm. But a little reflection shows that even when numbers are obtained from a standard scale and they are considered objective, their interpretation is always, I repeat, always, subjective. We need to validate the idea that we can use judgments to derive tangible values to provide greater credence for using judgments when intangibles are involved.

1.2 Analytical Hierarchy Procedure (AHP)

To make a decision in an organized way to generate priorities we need to decompose the decision into the following steps. 1. Define the problem and determine the kind of knowledge sought. 2. Structure the decision hierarchy from the top with the goal of the decision, then the objectives from a broad perspective, through the intermediate levels (criteria on which subsequent elements depend) to the lowest level (which usually is a set of the alternatives). 3. Construct a set of pairwise comparison matrices. Each element in an upper level is used to compare the elements in the level immediately below with respect to it. 4. Use the priorities obtained from the comparisons to weigh the priorities in the level immediately below. Do this for every element. Then for each element in the level below add its weighed values and obtain its overall or global priority. Continue this process of weighing and adding until the final priorities of the alternatives in the bottom most level are obtained. To make comparisons, we need a scale of numbers that indicates how many times more important or dominant one element is over another element with respect to the criterion or property with respect to which they are compared. Table 1.1 exhibits the scale. Table 1.2 exhibits an example in which the scale is used to compare the relative consumption of drinks in the USA. One compares a drink indicated on the left with another indicated at the top and answers the question: How many times more, or how strongly more is that drink consumed in the US than the one at the top? One then enters the number from the scale that is appropriate for the judgment: for example enter 9 in the (coffee, wine) position meaning that coffee consumption is 9 times wine consumption. It is automatic that 1/9 is what one needs to use in the (wine, coffee) position. Note that water is consumed more than coffee, so one enters 2 in the (water, coffee) position, and in the (coffee, water) position. One always enters the whole number in its appropriate position and automatically enters its reciprocal in the transpose position.

Table 1.1: Fundamental Scale of Numbers

Table 1.2: Relative Consumption of drinks

1.2.1 Background of AHP

The Analytic Hierarchy Process (AHP) was develop by Thomas Saaty in 1970s, to provide a simple but the theoretically sound multiple criteria methodology for evaluating alternatives. It aims at quantifying relative priorities for a given set of alternative on a ratio scale, based on the judgment of the decision maker and stresses the importance of the intuitive judgment of a decision maker as well as the consistently of the comparison of the alternative in the decision making process. The application of Analytic Hierarchy Process can be found in such diverse fields as portfolio selection model solve by using AHP methodology construction contractor. A general prequalification exercise is performed to identify an appropriate i e the best, contractor from the applicants and to evaluate and score them according to their economic and technical aspects, quality standards, past performance and other characteristics. Various procedures, such as open tendering, restricted tendering or negotiation, are practiced for contractor selection. A contractor is selected either from all the bidders or the contractor selection process can be divided into two phases: prequalification and final selection. Contractor prequalification involves a screening procedure based on a set of criteria set forth by each individual owner. As pointed out by Palaneeaswaran contractor prequalification is generally preferred by clients to minimize risks and failures and to enhance the performance levels of selected contractors by means of established minimal capacities below which contractors will not be considered. Analytic Hierarchy Process is an effective decision making technique based on multi-criteria decision making methodology (MCDM). It consider the human judgment, experience, perception and feelings in the decision making process. This research focus on developing a theoretical selection model based on the AHP approach. It help decision maker to select the most appropriate contractor against a number of contractors with various alternatives.

Figure 1.2: AHP Process of Evaluating

Chapter Two

Literature Review
Quality competence is the ability that the organization acquires sustainable competitive predominance and realizes sustainable development in virtue of excellent quality. A company must focus on both their immediate customers and those next in the chain. So creating a winwin situation is a basic requirement for each supplier and manufacturer. And creating triple wins produces expansion for the entire industry. In todays international business environment, quality cannot be underestimated or overlooked by any firm, regardless of its size or assets. Researchers suggests that managing well supplier involvement can lead to better supplier performance, improved manufacturing, and product and process advancements that in turn enhance customer satisfaction and firm performance. Loyalty of customers is a function of satisfaction, and loyal customers: spend more on your products and services; encourage others to buy from you; and, believe that what they buy from you is worth what they pay for it. Customer satisfaction is considered to be one of the most important competitive factors for the future. Some consequences of customer satisfaction are: improvement of the firms reputation and image; reduction of customer turnover; increased attention to customer needs in TQM planning; reduction of marketing costs and, vice versa, lower transaction costs; reduction of costs related to product/service failures and, lastly, increased satisfaction among personnel and greater stability of the workforce. In relation to the awards, customer satisfaction is seen as one component of the quality system, even though, as in the Baldrige Award, it is sometimes the most important one. In the European Quality Award customer satisfaction is one out of three satisfaction results, the others being employee satisfaction and society satisfaction. In fact, techniques and tools are vital to support and develop the quality improvement process. The definition of quality is satisfaction of needs or requirements. So it is very clear that the Quality, customer satisfaction and Profitability are interdependent. When the customer becomes satisfy from the quality of the product then only they will buy the product. If the product does not meet the customer requirement then definitely the customer will not buy the product or services. And once the customer becomes satisfy one can earn good profits from the customer.

Figure 2.1: Dependence between quality, satisfaction and profitability

2.1 Critical Factors

There are six critical factors for implementation of AHP technique namely: Human Resources Material Machine and Methodology Planning Organizational Culture Supplier and Customer Inspection

Table 2.1: Factors & Co-factors affecting quality of manufacturing Industry

2.1.1 Human Resource

This factor involves management of Human resource inside or outside the industry. It plays a vital role in management of quality in any manufacturing industry. Deming (1986) stresses the human aspects in his 14-points for quality improvement. Other quality experts (Crosby, 1979; Juran, 1986 ; Steeples, 1992) also underline the roles of human resource development to maximize peoples ability. The co-factors of this human resource are: man power planning, employee attitude, human relations, employee motivation, and adequate supervision.

In man power planning the employee are segregated according to their skills and then assigned related assignments to them to get the best output from them. The attitude of employee must be qualitative then only they can produce quality goods. The employee must be motivated enough so that they will work for their organization full heartily because a demotivated employee always get frustrated and will not be able to work satisfactorily. A employee can be motivated by their salary, bonus, promotions and increments, they should also be recognized time to time through awards etc for their best work and achievements. The employee must be supervised effectively for proper workdone and results. The employees should be trained and educated properly before assigning them any new job or assignments so that the system should work effectively because an untrained worker may lead to accident, wastage and scrap will increase, so to reduce them the training of employees are necessary.

2.1.2 Material, Machine and Methodology The material, machine and methodology are the three ms which affect the quality of manufacturing strongly. The cofactors are: Effective manufacturing methodology, uninterrupted flow of material, Tools used, adequate process capability, Safety requirements, Transportation and storage. The manufacturing methodology should be of that type so that only good quality of jobs will produce at low cost and time, with low wastage and scrap. The machines used should be properly maintained time to time, any improper maintenance will produce vibrations, affecting the functioning of machines, breakdowns will increase and ultimately the product of quality will deteriorate. Poor quality of materials is the most common reason for the failure of the products. The material should also be of that type so that it will not produce any side effect to other man, machine and material. Sometimes the poor quality of material is available at concessional price which affects the quality level badly. So always buy only good quality of raw material. The material must be available readily so that an uninterrupted flow of material is maintained; any interruption in the flow of material may lead to sudden break of production line which affects the production quality and quantity badly. To get the uninterrupted flow of material always choose well reputed vendor, who will supply good quality material within the time.

The tools and other attachment used for production with the machine must be of good quality and handled properly because sometimes due to mishandling of tools they will get damage. The process capability of the system should be good otherwise the whole system will collapse. One should take care about the safety requirementsbecause any carelessness may lead to severe consequences like accidents, fire etc. The transportation and storage is also an important factor, during transportation of material or products, one should take care that they should not break or damage during transportation and will reach to their destination on time. The material and products should be stored in a way that they should not spoil by any means like seepage, moisture, temperature changes or any other reason.

2.1.3 Planning Planning is the first step in the process of management. Planning is deciding in advance what to do, where to do and by whom to do. Basically, planning is deciding the future course of action in present. Thus, planning bridges the gap between present and future. The co-factors of planning are: financial planning and analysis, plant location and layout, competition in the market, facilities provided to employees, effective feedback of customer. The financial planning and analysis meant for forecasting the expenditure as regards to production cost, plant utilization, selling and distribution, purchases, etc. On behalf of this factor any organization can plan their future accordingly and investments in the organization. The performance of an Industry is considerably affected by its location and layout. Unscientific and Unplanned Location and layout produce a very harmful effect on the performance of manufacturing unit. It includes all major factors like travel time, cost of production, selling price etc. One should consider the competition present in the market and design their product and cost accordingly. Adequate facilities should be provided to the employees so the working environment remains good like proper fans, lighting, drinking water etc. All these things keep the workers fresh and then they can work efficiently.

2.1.4 Organizational Culture Organizational culture meant for providing best environment within the organization for the efficient, systematic, positive and coordinated applications of available resources. The cofactors of organizational culture are: Working conditions, Unhealthy relationships with outside partners, Interdepartmental relationships, Harmonious relationships within the Industry, Comprehension of management towards quality. Working conditions meant here for physical environment which directly related to the employees like Noise of the machines, heat dissipation, hard water etc, such type of elements should be avoided to get the best working environment. The relationships of the Industry people with others outside the Industry should be good which directly or indirectly maintain their reputation or business in the market. Firms producing high-quality products give far greater attention to developing partnerships with exceptional suppliers than on reducing piece price. Harmonious relationship with in the Industry deals with the men and their behavior. It deals with the personnel required to administrate, manage and carryout the functions of the system. Human relations, as a corporate philosophy of administrative vitality and action, play a significant role in maintaining the quality of the Industry. In order to implement quality policies within the industry, the management should create an organizational environment that focuses on continuous improvement. Their commitment promotes the creation of clear and visible quality values, along with a management system to guide all activities of the company towards quality excellence.

2.1.5 Supplier and Customer Supplier and customer are the two major factors which plays a significant role in quality management of any industry. Managing well supplier involvement can lead to better supplier performance, improved manufacturing, and product and process advancements that in turn enhance customer satisfaction and firm performance. (Epatko, 1994; Schilling and Hill, 1998; Vonderembse and Tracey, 1999; Shin et al., 2000). The co-factors are: capacity verification of vendors; vendor vendee relationships; Surveillance of quality at vendors place; performance feedback on reliability. The Industry People should verify the capacity of the vendors that whether the vendor is able to supply the required product in required quantity or quality or not. Suppose if the vendor is not able to supply the right quantity or quality of material then the manufacturing process will badly affected and the quality will deteriorate.

The relationships between vendor and vendee should always good. The Industry people have the important responsibility of selecting suppliers within the framework of achieving system-wide goals as opposed to minimizing piece price (Bregman, 1995; Mason, 1996;Krause, 1997; Roos, 1998; Degraeve and Roodhooft, 1999). They have relationship managers; facilitating decision making by bringing together the pertinent parties internal and external to the organization (Cooper and Ellram, 1993) The Industry must sent some Inspectors at the vendors place to check that whether vendor making their product as per requirements or not. If not then they can stop or correct them in between which prevent wastage of material and time. The feedback of the customer plays a significant role in determining the quality of the product, as per the feedback of the customer the Industry should made amendments in their product to reach the quality level according to the customer.

2.1.6 Inspection Inspection is the part of quality control. Inspection is the act of checking materials, parts, components or products at various stages in manufacturing and sorting out the faulty or defective items from good items. The co-factors are: Inspection procedures; procurement of special test equipment; Process surveillance and Inspection. Inspection procedure is concerned with quality of past production to judge conformance with specifications and sorting out defective items from good items. So the Inspection procedures must be so accurate that no any defective item gets through. Inspection must be done through proper test equipment. For correct measurement and testing, right instrument should be used. Sometimes in industry, they do not used the right instrument for any special measurement due to high cost of instrument. They try to work with below standard or cheap instrument to save the cost which lead to wrong measurement and quality level goes down. Inspection is not always the final activity of any product. It should be done in between also so that if anything goes wrong in the process, it can be protected in between to prevent the wastage and scrap.