A PURCHASING DECISION： SELECTING A SUPPLIER FOR A CONSTRUCTION COMPANY

1. Introduction Since the purchasing function has become vital in determining the profitability and survival of business organizations, it has been receiving considerable attention. As Sarkis and Talluri (2002) indicated, buyer-supplier relationships based solely on price are no longer acceptable. The increasing importance of supplier selection decisions is forcing organizations to rethink their purchasing and evaluation strategies because a successful purchasing decision directly depends on …

A purchasing decision: Selecting a supplier for a construction company

Supplier selection is one of the most crucial activities performed by organizations because of its strategic importance. Supplier selection is a multi-objective problem involving both quantitative and qualitative criteria. Over the years a number of quantitative approaches have been tried. Although the Analytic Hierarchy Process (AHP) has previously been used in supplier selection problems, one major weakness of the application-oriented AHP literature is that it tends to focus on the mechanics of AHP instead of on the theoretical and practical implications associated with finding a solution. Though it is one of the most extensively used Multiple Criteria Decision Analysis methodologies, our literature search indicated that most studies found the best solution and stopped there, ignoring sensitivity analysis. Performing sensitivity analysis is very important for practical decision making, sometimes even as important as finding the best solution. In this paper for the first time a comprehensive application of AHP for a real-world case is presented along with sensitivity analysis in choosing the best suppliers for a Turkish construction company. As a result of this study the company decided to allocate the order quantities between the two top suppliers.