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Use of fuzzy
Use of fuzzy AHP for evaluating AHP
the benefits of
information-sharing decisions in a
263
supply chain
Selçuk Perçin
Department of Business Administration,
The Faculty of Economics and Administrative Sciences,
Karadeniz Technical University, Trabzon, Turkey
Abstract
Purpose – The purpose of this paper is to provide a good insight into the use of fuzzy Analytical
Hierarchy Process (fuzzy AHP) approach that is a multi-criteria decision-making methodology in
evaluating the benefits of information-sharing decision problems.
Design/methodology/approach – In this study, the integration of AHP with the fuzzy synthetic
extent analysis method (fuzzy AHP) is proposed in evaluating the benefits of information-sharing
decision problems as a framework to guide managers.
Findings – Findings demonstrate that the customer requirement and operational information
alternatives are the preferred key decisions, which all supply chain partners might agree to share with
one another. Further, it can also be concluded that the planning and financial information alternatives
have almost the same importance.
Research limitations/implications – Fuzzy AHP is a highly complex methodology and requires
more numerical calculations in assessing composite priorities than the traditional AHP and hence it
increases the effort. In addition, fuzzy methodology could be extended with the other multi-criteria
decision-making (MCDM) methods such as Analytical Network Process (ANP), TOPSIS, ELECTRE
and DEA techniques in solving such a problem.
Originality/value – There is a lack of research in the literature to deal directly with the uncertainty
of human judgements in evaluating the benefits of various information-sharing decisions in a supply
chain. Therefore, fuzzy AHP is an appropriate methodology to select the various types of information
and has the ability to be used as a decision-making analysis tool since it handles uncertain and
imprecise data. In addition, the paper is especially of interest to managers as they make decisions on
which types of information they should share with their supply chain partners.
Keywords Supply chain management, Analytical hierarchy process, Decision making
Paper type Research paper
269
Figure 1.
The hierarchy of the
information sharing
decision problem
one criterion over another, and then by using the extent analysis method, the synthetic
extent value of the pairwise comparison is calculated.
The earliest work in fuzzy AHP appeared in Van Laarhoven and Pedrycz (1983),
which compared fuzzy ratios described by triangular membership functions. Later,
using geometric mean, Buckley (1985) determined fuzzy priorities of comparison ratios
whose membership functions were trapezoidal. By modifying the Buckley’s (1985)
method, Boender et al. (1989), presented a more robust approach to the normalization of
the local priorities. According to the Boender et al. (1989), the triangular approximation
of fuzzy operations provides fuzzy solutions with much smaller spread than Buckley’s
(1985) method. After that, Ruoning and Xiaoyen (1992) constructed the fuzzy judgment
matrix by using continuous judgment scale and emphasizing that every element of this
matrix can be presented by a positive bounded closed fuzzy number. Chang (1996)
introduced a new approach for handling fuzzy AHP, with the use of triangular fuzzy
numbers for pairwise comparison scale of fuzzy AHP and the use of extent analysis
method for the synthetic extent values of the pairwise comparisons. Cheng (1996)
proposed another algorithm for evaluating naval tactical missile systems by fuzzy
AHP based on grade value of membership function. Kahraman et al. (1998) developed a
fuzzy weighted evaluation method using objective and subjective measures. Deng
(1999) presented a fuzzy approach for dealing with qualitative multi-criteria analysis
problems in a simple and straightforward manner. Lee et al. (1999) introduced the
concept of comparison interval scales and proposed a methodology based on stochastic
optimization to achieve global consistency and to accommodate the fuzzy nature of the
comparison process. Cheng et al. (1999) proposed a new method for evaluating weapon
systems by AHP based on the linguistic variable weight. Zhu et al. (1999) discussed the
extent analysis method and applied some practical examples of fuzzy AHP. Leung and
Cao (2000) proposed a fuzzy consistency definition with consideration of a tolerance
deviation for alternatives in fuzzy AHP. More recently, Kuo et al. (2002) developed a
JEIM decision support system for locating a new convenience store. Mikhailov (2002) applied
21,3 the AHP method in conjunction with fuzzy preference programming approach for
partnership selection problem in establishment of virtual enterprises. Yu (2002)
incorporated an absolute term linearization approach and a fuzzy rating expression into
an AHP-goal programming (GP) model for solving group decision making fuzzy AHP
problems by employing the property of GP to treat a fuzzy AHP problem (Büyüközkan,
270 2004). Recently, fuzzy AHP has been extensively applied in the literature. Some
examples of these applications include computer integrated manufacturing systems
justification and selection, quality function deployment, catering service companies
evaluation, e-marketplace selection, software development strategy selection, new
product development process, technology management, project risk evaluation, and
global supplier selection (Bozdağ et al., 2003; Kwong and Bai, 2003; Kahraman et al.,
2004; Büyüközkan, 2004; Büyüközkan et al., 2004; Büyüközkan and Feyzioglu, 2004;
Erensal et al., 2006; Tüysüz and Kahraman, 2006; Chan and Kumar, 2007).
M 1gi ; M 2gi ; . . . ; M m
gi ; i ¼ 1; 2; . . . ; n ð1Þ
where all the M jgi (j ¼ 1; 2, . . . ,m) are triangular fuzzy numbers (TFNs) whose
parameters are l, m, and u. They are the least possible value, the most possible value,
and the largest possible value respectively. A TFN is represented as (l,m,u). The steps
of the extent analysis method can be given as follows (Büyüközkan, 2004):
3.2.1 Step 1. The value of fuzzy synthetic extent with respect to the ith object is
defined as:
" #21
X
m n X
X m
Si ¼ M jgi ^ M jgi ð2Þ
j¼1 i¼1 j¼1
X
m
To obtain M jgi , we perform the fuzzy addition operation of m extent analysis values
j¼1
for a particular matrix such that:
!
X
m X
m X
m X
m
M jgi ¼ l ij ; mij ; uij ð3Þ
j¼1 j¼1 j¼1 j¼1
hP i21
n Pm j
and to obtain i¼1 i¼1 M gi , we perform the fuzzy addition operation of
N jgi ð j ¼ 1; 2; . . . ; mÞ values such that:
!
X
n X
m X
n X
n X
n Use of fuzzy
M jgi ¼ l ij ; mij ; uij ð4Þ AHP
i¼1 i¼1 i¼1 i¼1 i¼1
X
m Xm X
m
where l i ¼ l y ; mi ¼ mij ; ui ¼ uij
j¼1 j¼1 j¼1
271
Then, the inverse of the vector in equation (5) is computed as:
0 1
" #21 B C
X n X n B 1 1 1 C
M jgi ¼B
BX ; ; C where ;ui; mi; li . 0
C ð5Þ
@
n Xn X
n
A
i¼1 j¼1 ui mi li
i¼1 i¼1 i¼1
2
3.2.2 Step 2. The degree of possibility of M ¼ ðl 2 , m2, u2) $ M 1 ¼ ðl 1 , m1, u1) is
defined as:
V ðM 2 $ M 1 Þ ¼ sup½ min ðmM 2 ð yÞÞ: ð7Þ
y$x
where d is the ordinate of the highest intersection point D between mM 1 and mM 2 >
(see Figure. 2). To compare M1 and M2, we need both the values of V(M1 $ M2) and
V(M2 $ M1). The intersection between M1 and M2 is shown in Figure 2.
3.2.3 Step 3. The degree possibility for a convex fuzzy number to be greater than k
convex fuzzy numbers Mi(i ¼ 1, 2, . . . , k) can be defined by:
$ M k Þ ¼ min V ðM $ M i Þ; i ¼ 1; 2; . . . ; k: ð9Þ
Assume that:
D0 ðS i Þ ¼ min V ðS i $ S k Þ ð10Þ
JEIM
21,3
272
Figure 2.
The intersection between
M1 and M2
W 0 ¼ D0 ðS 1Þ ; D0 ðS 2 Þ; . . . ; D0 ðS n ÞÞT ð11Þ
where Si (i ¼ 1, 2, . . . , n) are n elements.
2.2.4 Step 4. After normalization (the elements of each column is divided by the sum
of that column and the elements in each resulting row are added and this sum is
divided by the number of elements in the row), the normalized weight vectors are
obtained as follows:
Figure 3.
The linguistic scale of the
triangular numbers for
relative importance (RI)
Linguistic scale for importance Triangular fuzzy scale Triangular fuzzy reciprocal scale
Using these vectors and formula (8), we can calculate the following values:
SB MB OB
Table II.
The fuzzy evaluation Strategic benefits (1, 1, 1) (1, 3/2, 2) (1, 3/2, 2)
matrix with respect to the Managerial benefits (1/2, 2/3, 1) (1, 1, 1) (1/2, 1, 3/2)
goal Operational benefits (1/2, 2/3, 1) (2/3, 1, 2) (1, 1, 1)
and operational benefits are more important than managerial benefits. Moreover, we Use of fuzzy
also observe that operational benefits are more important than managerial benefits. As AHP
a consequence, the strategic and operational benefits of information-sharing decisions
can result in much greater efficiency for ongoing success of supply chain partners. In a
similar fashion, the managers now compare the sub-criteria with respect to the main
criteria. First, they compare the sub-criteria of strategic benefits. Table III gives the
relative importance of strategic benefits sub-criteria. 275
From Table III, we calculate SFC ¼ ð0:18, 0.36, 0.60), SIMS ¼ ð0:12, 0.25, 0.44),
SEC ¼ ð0:10, 0.19, 0.33), SINP ¼ ð0:11, 0.22, 0.48), V(SFC $ S IMS Þ ¼ 1:00, V(SFC $
S EC Þ ¼ 1:00, V(SFC $ S INP Þ ¼ 1:00, V(SIMS $ S FC Þ ¼ 0:70, V(SIMS $ S EC Þ ¼ 1:00,
V(SIMS $ S INP Þ ¼ 1:00, V(SEC $ S FC Þ ¼ 0:47, V(SEC $ S IMS Þ ¼ 0:78, V(SEC $
S INP Þ ¼ 0:88, V (SINP $ S FC Þ ¼ 0:68, V(SINP $ S IMS Þ ¼ 0:92, V(SINP $
S EC Þ ¼ 1:00. Then, the normalized weight vector from Table III is calculated as
W SB ¼ ð0:35, 0.25, 0.16, 0.24)T. Based on these results, we conclude that in order to
increase the benefits of strategic sub-criteria; facilitate supply chain collaboration and
increase market share appear to be more important than enhance conflict resolution
and increase new product introduction. This result shows that cost effective, timely
and reliable flows of materials, information and finance to satisfy customer
requirements and to increase market share motivates supply chain partners to share
information (Lee, 2000; Muckstadt et al., 2001). Now, the other two matrices relevant to
pairwise comparisons of the sub-criteria of managerial and operational benefits and,
the relative importance of each matrix are given in Table IV and Table V, respectively.
FC IMS EC INP
Facilitate supply chain collaboration (1, 1, 1) (1, 3/2, 2) (3/2, 2, 5/2) (1, 3/2, 2) Table III.
Increase market share (1/2, 2/3, 1) (1, 1, 1) (1, 3/2, 2) (1/2, 1, 3/2) The relative importance
Enhance conflict resolution (2/5, 1/2, 2/3) (1/2, 2/3, 1) (1, 1, 1) (1/2, 1, 3/2) of strategic benefits
Increase new product introduction (1/2, 2/3, 1) (2/3, 1, 2) (2/3, 1, 2) (1, 1, 1) sub-criteria
IC CD FPR
IL LT SC IPD
Reduce inventory level (1, 1, 1) (1, 3/2, 2) (1/2, 1, 3/2) (3/2, 2, 5/2) Table V.
Reduce lead time (1/2, 2/3, 1) (1, 1, 1) (1/2, 1, 3/2) (1, 3/2, 2) The relative importance
Reduce supply chain costs (2/3, 1, 2) (2/3, 1, 2) (1, 1, 1) (1, 3/2, 2) of operational benefits
Improve production/distribution scheduling (2/5, 1/2, 2/3) (1/2, 2/3, 1) (1/2, 2/3, 1) (1, 1, 1) sub-criteria
JEIM The normalized weight vector from Table IV is calculated as W MB ¼ ð0:53, 0.35,
21,3 0.12)T. We can observe that for the managerial benefits of a company, increase
communication and increase capacity allocation decisions play a much more important
role than other criteria.
The normalized weight vector from Table V is calculated as W OB ¼ ð0:32, 0.25,
0.28, 0.15)T. Consequently, we can deduce that the most important criteria for the
276 operational benefits of a company are reducing inventory level, reducing supply chain
costs and reducing lead-time. In Table VI, we present the composite priority weights
obtained by the evaluation of information-sharing benefits with respect to main criteria
and sub-criteria.
OP PD CRD FD WFC
Table VII.
Evaluation of the Operational (1, 1, 1) (1/2, 2/3, 1) (1/2, 1, 3/2) (2/5, 1/2, 2/3) 0.16
alternatives with respect Planning (1, 3/2, 2) (1, 1, 1) (1, 3/2, 2) (2/3, 1, 2) 0.30
to facilitating supply Customer requirement (2/3, 1, 2) (1/2, 2/3, 1) (1, 1, 1) (2/5, 1/2, 2/3) 0.19
chain collaboration Financial (3/2, 2, 5/2) (1/2, 1, 3/2) (3/2, 2, 5/2) (1, 1, 1) 0.35
OP PD CRD FD WIMS
Table VIII.
Evaluation of the Operational (1, 1, 1) (2/5, 1/2, 2/3) (2/5, 1/2, 2/3) (3/2, 2, 5/2) 0.21
alternatives with respect Planning (3/2, 2, 5/2) (1, 1, 1) (2/3, 1, 2) (2/5, 1/2, 2/3) 0.26
to increasing market Customer requirement (3/2, 2, 5/2) (1/2, 1, 3/2) (1, 1, 1) (1, 3/2, 2) 0.31
share Financial (2/5, 1/2, 2/3) (3/2, 2, 5/2) (1/2, 2/3, 1) (1, 1, 1) 0.22
two sub-criteria with respect to reduce lead-time and improve production/distribution Use of fuzzy
scheduling, customer requirement information alternatives show a good performance AHP
in terms of all criteria. Planning information alternative is the weakest except for three
sub-criteria in which it shows a highest performance level. This means that managers
consider the operational and customer requirement information as being more
important than planning and financial information.
277
OP PD CRD FD WEC
Table IX.
Operational (1, 1, 1) (2, 5/2, 3) (1, 3/2, 2) (3/2, 2, 5/2) 0.49 Evaluation of the
Planning (1/3, 2/5, 1/2) (1, 1, 1) (1/2, 2/3, 1) (1/2, 2/3, 1) 0.05 alternatives with respect
Customer requirement (1/2, 2/3, 1) (1, 3/2, 2) (1, 1, 1) (1, 3/2, 2) 0.29 to enhancing conflict
Financial (2/5, 1/2, 2/3) (1, 3/2, 2) (1/2, 2/3, 1) (1, 1, 1) 0.17 resolution
OP PD CRD FD WINP
Table X.
Operational (1, 1, 1) (2/5, 1/2, 2/3) (1/2, 2/3, 1) (1/2, 2/3, 1) 0.15 Evaluation of the
Planning (3/2, 2, 5/2) (1, 1, 1) (1, 3/2, 2) (1/2, 1, 3/2) 0.32 alternatives with respect
Customer requirement (1, 3/2, 2) (1/2, 2/3, 1) (1, 1, 1) (1/2, 1, 3/2) 0.25 to increasing new product
Financial (1, 3/2, 2) (2/3, 1, 2) (2/3, 1, 2) (1, 1, 1) 0.28 introduction
OP PD CRD FD WIC
Table XI.
Operational (1, 1, 1) (3/2, 2, 5/2) (1/2, 2/3, 1) (1, 3/2, 2) 0.32 Evaluation of the
Planning (2/5, 1/2, 2/3) (1, 1, 1) (2/5, 1/2, 2/3) (2/5, 1/2, 2/3) 0.05 alternatives with respect
Customer requirement (1, 3/2, 2) (3/2, 2, 5/2) (1, 1, 1) (1, 3/2, 2) 0.38 to increasing
Financial (1/2, 2/3, 1) (3/2, 2, 5/2) (1/2, 2/3, 1) (1, 1, 1) 0.25 communication
OP PD CRD FD WCD
Table XII.
Operational (1, 1, 1) (1/3, 2/5, 1/2) (1/2, 2/3, 1) (1, 3/2, 2) 0.18 Evaluation of the
Planning (2, 5/2, 3) (1, 1, 1) (2/5, 1/2, 2/3) (2/5, 1/2, 2/3) 0.24 alternatives with respect
Customer requirement (1, 3/2, 2) (3/2, 2, 5/2) (1, 1, 1) (1, 3/2, 2) 0.34 to increasing capacity
Financial (1/2, 2/3, 1) (3/2, 2, 5/2) (1/2, 2/3, 1) (1, 1, 1) 0.24 allocation decision
Table XIII.
OP PD CRD FD WFPR Evaluation of the
alternatives with respect
Operational (1, 1, 1) (1, 3/2, 2) (1, 3/2, 2) (2, 5/2, 3) 0.41 to making better
Planning (1/2, 2/3, 1) (1, 1, 1) (2/5, 1/2, 2/3) (2/5, 1/2, 2/3) 0.05 decisions on forecasting,
Customer requirement (1/2, 2/3, 1) (3/2, 2, 5/2) (1, 1, 1) (1, 3/2, 2) 0.32 planning, and resource
Financial (1/3, 2/5, 1/2) (3/2, 2, 5/2) (1/2, 2/3, 1) (1, 1, 1) 0.22 control
JEIM 4.3 Final scores of alternatives
21,3 In Tables XVIII-XX we present the last computations in order to obtain the alternative
priority weights of our information alternatives. This is accomplished by aggregating
the weights over the hierarchy for each decision alternative. To do this, we multiply the
weights along the path from the top of the hierarchy to a decision alternative, and then
278
OP PD CRD FD WIL
Table XIV.
Evaluation of the Operational (1, 1, 1) (3/2, 2, 5/2) (1/2, 2/3, 1) (1, 3/2, 2) 0.35
alternatives with respect Planning (2/5, 1/2, 2/3) (1, 1, 1) (1/3, 2/5, 1/2) (1/2, 2/3, 1) 0.00
to reducing inventory Customer requirement (1, 3/2, 2) (2, 5/2, 3) (1, 1, 1) (3/2, 2, 5/2) 0.47
level Financial (1/2, 2/3, 1) (1, 3/2, 2) (2/5, 1/2, 2/3) (1, 1, 1) 0.18
OP PD CRD FD WLT
Table XV. Operational (1, 1, 1) (1/2, 1, 3/2) (3/2, 2, 5/2) (2/5, 1/2, 2/3) 0.26
Evaluation of the Planning (2/3, 1, 2) (1, 1, 1) (2, 5/2, 3) (2, 5/2, 3) 0.45
alternatives with respect Customer requirement (2/5, 1/2, 2/3) (1/3, 2/5, 1/2) (1, 1, 1) (1/2, 2/3, 1) 0.00
to reducing lead time Financial (3/2, 2, 5/2) (1/3, 2/5, 1/2) (1, 3/2, 2) (1, 1, 1) 0.29
OP PD CRD FD WSC
Table XVI.
Evaluation of the Operational (1, 1, 1) (3/2, 2, 5/2) (1/2, 2/3, 1) (1, 3/2, 2) 0.31
alternatives with respect Planning (2/5, 1/2, 2/3) (1, 1, 1) (2/5, 1/2, 2/3) (2, 5/2, 3) 0.21
to reducing supply chain Customer requirement (1, 3/2, 2) (3/2, 2, 5/2) (1, 1, 1) (2, 5/2, 3) 0.48
costs Financial (1/2, 2/3, 1) (1/3, 2/5, 1/2) (1/3, 2/5, 1/2) (1, 1, 1) 0.00
5. Conclusion
In a competitive environment, the success of organizations will increasingly depend on
their information to share with partners in their strategic decisions. However,
managers are often uncertain about how to share the key information to enhance their
business. This research proposes a methodology for both managers and a group of
organizations in a supply chain to make decisions on which types of information they
should share with their partners.
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Appendix 1. The definition of the triangular fuzzy number and fuzzy operational
laws
A fuzzy number is a special fuzzy set F ¼ x [ RjmF(x)}, where x takes its values on the real line
R1: 2 1 , x , 1 and mF(x) is a continuous mapping from R1 to the close interval[0, 1]. A
triangular fuzzy number can be denoted as M ¼ ðl, m, u). Its membership function mM(x): ! [0,
1] is equal to:
8
> 0; x , l or x . u
>
<
mM ðxÞ ¼ ðx 2 l Þ=ðm 2 l Þ l # x # m;
>
>
: ðx 2 uÞ=ðm 2 uÞ m # x # u:
where l # m # u, l and u stand for the lower and upper value of the support of M respectively,
and m is the mid-value of M. when l ¼ m ¼ u, it is a non-fuzzy number by convention. The main
operational laws for two positive triangular fuzzy numbers M1 and M2 are as follows
(Triantaphyllou, 2000):
M 1 þ M 2 ¼ ðl 1 þ l 2 ; m1 þ m2 ; u1 þ u2 Þ;
M 1 ^M 2 < ðl 1 l 2 ; m1 m2 ; u1 u2 Þ;
l^M 1 ¼ ðll 1 ; lu1 ; lu1 Þ; l . 0; l [ R;
M 21
1 < ð1=u1 ; 1=m1 ; 1=l 1 Þ:
Appendix 2. Questionnaire
The questionnaire is composed of questions relating to the benefits of information-sharing and
information-sharing decision alternatives. The questionnaire was conducted with 30 of the top
500 Turkish firms operating in various manufacturing industries within the city of Istanbul in
Turkey. This sample was selected randomly from the database of Istanbul Chamber of
Commerce. Questionnaires were sent by fax to the selected companies. It was requested that the
questionnaire be completed by functional executives such as logistics manager, production
JEIM manager and information technology manager. However, of the 30 questionnaires sent, 4 of the
questionnaires were returned after one follow-up. Then, managers of the selected companies
21,3 were invited to answer the questions by phone and provided with an explanation of the purpose
of the study. With the collaboration of 9 managers, the overall responses were received for a net
response rate of 43 percent (13/30), which was considered satisfactory for fuzzy AHP analysis.
Then, the answers’ averages are computed and rounded to their closest linguistic scale (Table I)
in order to analyze these data by using fuzzy AHP. This method is basically similar to the one
284 proposed by Erensal et al. (2006). A sample of questions from the questionnaire can be given as
follows:
If a criterion on the left is more important than the one on the right, put cross mark “X” to the
left of the equally important “EI” column, under the importance level (column) you prefer. On the
other hand, if a criterion on the left is less important than the one on the right, put cross mark “X”
to the right of the equally important “EI” column under the importance level (column) you prefer.
With respect to the overall goal “evaluating the benefits of information-sharing decisions in a
supply chain”
Q1. How important is the strategic benefits (SB) when it is compared to
managerial benefits (MB)?
Q2. How important is the strategic benefits (SB) when it is compared to
operational benefits (OB)?
Q3. How important is the managerial benefits (MB) when it is compared to
operational benefits (OB)?
The answers related for this sample questions are presented in Table AI.