SUPPLIER SELECTION BY COMBINATION OF AHP METHOD AND ROUGH SETS THEORY AND PRESENTING A MODEL FOR ORDER ALLOCATION TO SELECTED SUPPLIERS

Supplier selection is one of the most critical activities of purchasing management in a supply chain, because of the key role of supplier's performance on cost, quality, delivery, and service in achieving the objectives of a supply chain. Selecting the right suppliers signi - cantly reduces the purchasing cost and improves corporate competitiveness, which is why many experts believe that the supplier selection is the most important activity of a purchasing department. Supplier selection is a multiple-criteria decision-making (MCDM) problem that is aected by several con icting factors. Consequently, a purchasing manager must analyze the tradeo  among several criteria. MCDM techniques support the decision makers (DMS) in evaluating a set of alternatives. In a real situation, for supplier selection problems, the weights of criteria are dierent and depend on purchasing strategies in a supply chain. Many multicriteria decision making approaches have been proposed for supplier selection, such as Analytic Hierarchy Process (AHP), Analytic Network Process (ANP), Case-based Reasoning (CBR), Data Envelopment Analysis (DEA), fuzzy set theory, Genetic Algorithm (GA), mathematical programming, Simple Multi-Attribute Rating Technique (SMART), and their hybrids. Supplier selection is a multi-criteria decision making problem, which includes both qualitative and quantitative factors. In order to select the best suppliers, it is necessary to make a trade-o between these tangible and intangible factors, some of which may con ict. When business volume discounts exist, this problem becomes more complicated as, in these circumstances, buyer should decide about two problems: which suppliers are the best and how much should be purchased from each selected supplier. In this article, an integrated approach of Analytical Hi- erarchy Process (AHP), improved by rough sets theory and multi-objective mixed integer programming, is proposed to simultaneously determine the number of suppliers to employ and the order quantity allocated to these suppliers. A solution methodology is presented to solve the multi-objective model and the model is illustrated using a numerical example.