A DEA approach for Supplier Selection with AHP and risk consideration

Supplier Selection is a problem that supply chain managers have been facing for many years. Selecting the appropriate suppliers is no longer as simple as choosing only based on the price they offer. There are many criteria, which can be either quantitative or qualitative, to be considered. There is thus a need for an approach that can handle these criteria. Besides, as supply chains are becoming more complex these days, it is also important to incorporate supply risks in the evaluation of the suppliers. This paper offers an approach that mainly focuses on Data Envelopment Analysis (DEA) to analyze and compare the relative efficiencies of the suppliers. Since DEA can only handle quantitative attributes, Analytic Hierarchy Process (AHP) is being utilized to help to analyze qualitative analysis. Risks are also being considered in the evaluation of the suppliers. The proposed approach seeks to offer a holistic approach to tackle the Supplier Selection problem.