Abstract of My Final Year Paper

ABSTRACT

Today most of business-to-business (B2B) collaborations are becoming short term and dynamic. It is unavoidable that business process be effective and efficient. Hence it is important to have system to select and rank business partners using multi criteria decision making (MCDM) method.

There are many methods proposed to solve MCDM problem. The two well known methods are Analytic Hierarchy Process (AHP) and Preference Ranking Organization Method for Enrichment Evaluation (PROMETHEE). Both AHP and PROMETHEE can be easily used and understood by decision maker.

\AHP is widely used because it makes possible to include judgment on intangible qualitative criteria and tangible quantitative criteria. In addition it doesn’t involve difficult mathematic equation. Moreover it provides consistency check for all pairwise comparison made.

On the other hand PROMETHEE is a modified approach from ELECTRE. PROMETHEE belongs to outranking method. It is based on the natural notion of criterion and intensity of preference, and need only two parameters. At present, there are six types of PROMETHEE methods to accommodate different types of MCDM problem.

The combination of these two methods provides a systematic approach for MCDM problem. One of the advantages of this method is that the decision maker can easily obtain information. However the subjectivity of result is still questionable since there is no strict limit to decision maker’s preference.

 

The application of MCDM method is widely spread in many areas. This report will only focus in one of the area, i.e. supplier selection. It will discuss on how to rank and select suppliers based on specific criteria and/or subjected to some constraints. These methods provide the company to be able decide the best option for business partner based on some criteria.

CHAPTER 1: INTRODUCTION

1.1  Background

Today’s business environment is changing with rapid speed. With the increase in technology and information exchange, traditional means of collaboration among enterprise such as phone, fax, email, etc are no longer adequate and efficient. Companies today operate in value chains, through both collaboration and competition [1]. The use of infocomm technologies such as the Internet, email, etc is important, in particular for business-to-business (B2B) collaborations. Most of B2B collaborations are becoming short term and dynamic [2]. It is unavoidable that business process be effective and efficient.

In order to support such short-term and dynamic collaborations, it is vital to be able to identify and rank suitable business partner quickly based on some selection criteria, with minimal human interference [2]. The selection criteria will be vary among companies and even within company itself , depending on the goal and objective that the company wants to achieve from the collaboration and the prevailing business conditions such as distances, available lead time, and costs for example. The importance of each selection criteria can also vary [3].

Hence it is important to have a system to select and rank business partners. With ease to get information from internet and/or the company itself, the ranking system can be easily adopted using multi criteria decision making (MCDM). The report discusses two MCDM methods, i.e. Analytical Hierarchy Process (AHP) and Preference Ranking Organization Method for Enrichment Evaluation (PROMETHEE); PROMETHEE I, PROMETHEE II, and PROMETHEE V, and applications of these two methods through case studies.