Vendor Selection in Manufacturing Industry using AHP and ANN

Suppliers are one of the most essential components of the value chain, the supplier selection and evaluation process are critically important management task. Supplier selection which is the first step of the activities in the product realization process starting from purchasing of the materials till the end of the products is evaluated as the critical factor for the companies in today s competitive condition. Supplier selection was considered as a Multi Criteria Decision Making Problem. The supplier selection process deploys a tremendous amount of a firm s financial resources. In return, firm s expect significant benefits from contracting with suppliers offering high value. There are many tools to select a supplier in a manufacturing industry. But in this paper we integrate the Analytic Hierarchy Process and Neural Network method to select an optimal vendor in supply chain management. This paper presents a hybrid model using Analytic Hierarchy Process (AHP) and Neural Networks (NNs) theory to review vendor performance. The model consists of two sections: Section 1 applies AHP using pair wise comparison of criteria for all vendors, Section 2 applies the results of AHP into NNs model for vendor selection. The results give up the best vendor.