Analytical Hierarchy Process Applied to Vendor Selection Problem: Small Scale, Medium Scale and Large Scale Industries

Vendor selection is an important process for an effective inventory management. This paper deals with a brief review of the literature regarding AHP technique and its relevancy to its application in vendor selection process. Vendor selection is a complicated process. This process needs evaluation of multiple criteria and various constraints associated with them. This paper has been developed based upon the views of various experts. A well researched methodology has been adopted for the synthesis of priorities and the measurement of consistencies. A consistency ratio has also been calculated. Industries has been classifies into small scale, medium scale and large scale. Various criteria for vendor selection process as received from the expert have been identified. These criteria have been compared using average matrix, priority matrix and overall priority matrix. After analysis of the results we found that for large scale industries, vendor reliability, product quality and vendor experience are the top three vendor selection problems that needs to be taken up on priority for effective vendor selection.