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Procedia Engineering 172 (2017) 1137 – 1145

Modern Building Materials, Structures and Techniques, MBMST 2016

A novel hybrid MCDM approach for complicated supply chain

management problems in construction
Jolanta Tamošaitienė *a, Edmundas Kazimieras Zavadskas a, Inga Šileikaitė a, Zenonas
Turskis a
a
Faculty of Civil Engineering, Vilnius Gediminas Technical University, Sauletekio al. 11, LT-10223 Vilnius, Lithuania

Abstract

The paper tackles a hybrid multi-criteria decision-making (MCDM) model related to supply chain management, problems, and the
supplier selection problem. Modern management of materials and products requires continuous evaluation of numerous complex
social, ecological, and economic factors. A group decision process using Analytic Hierarchical Process (AHP) approach presented
to find the criteria weights. Measurement of conflict among criteria and decision makers presented with illustration and numerical
example. Firstly, eight evaluation criteria, including cost, quality, distance, and delivery, reliability, reputation, and technology
level, compatibility, and development ability identified. Later, the ARAS and the Multiplicative Utility function adopted for ranking
and selecting suppliers. Criteria values normalized according to Hovanov method. The ARAS method with this normalisation
method named as a hybrid original model INMUARAS.

Published
© 2016 The by Elsevier
Authors.Ltd. This is anby
Published open access Ltd.
Elsevier article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-review under responsibility of the organizing committee of MBMST 2016.
Peer-review under responsibility of the organizing committee of MBMST 2016
Keywords: AHP; ARAS; Multiplicative utility function; hybrid model; INMUARAS; selection; construction; supply chain.

1. Introduction

The past few decades have seen increased concern for environmental issues by companies, governments, and the
public. Since the 3Rs of Reduce, Recycle and Remanufacture are the basic requirement for green supply chain
activities, a closed loop management from in-plant production to off-plant forward and reverse logistics has to be

*Corresponding author: Jolanta Tamošaitienė

E-mail address: jolanta.tamosaitiene@vgtu.lt

1877-7058 Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-review under responsibility of the organizing committee of MBMST 2016
doi:10.1016/j.proeng.2017.02.168
1138 Jolanta Tamošaitienė et al. / Procedia Engineering 172 (2017) 1137 – 1145

taken care of so that environmental impact and energy usage can be minimized.
Due to global intensive competition, many companies prioritize quick and precise responses to customers’ various
demands improving their supply chain management. Many strategic issues that confront business today stem from the
new rules of competition, globalization down pressure on price and the customer taking control. However, such
activities not generate savings or revenues, and thus are non-understandably for companies as cost centres.
Examples of strategies used to achieve the aims include:

 Use of environment-friendly materials;

 Product or process modifications to improve efficiency and reduce attendant environmental releases;
 Optimal operation of processes to minimize consumption of energy or raw materials and generation of waste,
and
 Implementing exchange of waste streams between process and plants to achieve industrial symbiosis.

Thus, decisions on supplier selection are as one of the most important aspects of production planning and control.
The term of supply chain management firstly used in the 1980s. A supply chain includes all activities, functions, and
facilities in the flow and transformation of goods and services from the material stage to the end user. The objective
of supply chain management is to maximise value in the supply chain. In addition, selecting suitable suppliers
significantly reduces material purchasing cost, improves the competitiveness of businesses, increases flexibility and
product quality, and helps with speeding up the process of material purchasing.
Experience from management of any complex system points toward some guidelines for the selection of strategic
paths:

 Once basic principles for the ultimate goal are clear, the individual’s potential for dealing with trade-offs and
for optimizing chances in multidimensional and complex situations (e.g., medical treatment) grows with
experience.
 The complete investment path need not necessarily be determined up-front, only smart flexible steps followed
by continuous reassessment as the “game” unfolds.
 Beyond a certain level of specificity, checklists may confuse more than help decision makers.

Supply chains comprise potential suppliers, producers, distributors, retailers, customers, etc. (Fig. 1). The repetitive
nature of supplier selection process and frequently changing customer demands lead to the increase in the uncertainty
and ambiguity of this decision-making process. Therefore, in order to achieve the successful operation of an ASC, an
effective supply partner selection becomes an essential process that may enhance effectiveness, efficiency, quality,
safety and profit. Supplier selection defined as a process for identification of an efficient combination of suppliers,
producers and distributors, depending on which the right mix and quantity of products and services provided to
customers.
 Jolanta Tamošaitienė et al. / Procedia Engineering 172 (2017) 1137 – 1145 1139

Fig. 1. Supply chain management.

Supplier selection is a multiple criteria decision-making (MCDM) problem affected by several conflicting factors.
The high value of a problem-solving process is that it helps to align human’s thinking and action around a common
approach for winning team problem solving to the following nine steps:

1) Selecting the problem;

2) Exploring the problem and gathering data;
3) Establishing success attributes;
4) Developing a clear problem statement;
5) Generating alternatives;
6) Evaluating alternatives;
7) Selecting a preferred solution;
8) Developing a plan for action;
9) Testing and modifying the solution.

Consequently, a purchasing manager must analyse trade-off between several criteria. MCDM techniques support
decision-makers in evaluating a set of alternatives.

2. Supplier selection model in complex environment

The study has summarized the latest studies on supplier selection and pointed out eight evaluation criteria: cost,
quality, distance, delivery reliability, reputation, technology level, compatibility and development ability (Fig. 2).
To solve the supplier selection problem was developed original model, which based on three different methods
namely: AHP, ARAS, and Multiplicative Utility function. In this case is applied normalization method according to
Hovanov [1].

ଶ
ቀ‫ݔ‬௜௝ െ ‹ ‫ݔ‬௜௝ ቁ
௜
‫ݔ‬ഺ௜௝ ൌ ቌ ቍ
ቀ‹ ‫ݔ‬௜௝ െ ‹ ‫ݔ‬௜௝ ቁ (1)
௜ ௜
1140 Jolanta Tamošaitienė et al. / Procedia Engineering 172 (2017) 1137 – 1145

ଶ
ቀƒš ‫ݔ‬௜௝ െ‫ݔ‬௜௝ ቁ
௜
‫ݔ‬ഺ௜௝ ൌ ቌ ቍ
ቀ‹ ‫ݔ‬௜௝ െ ‹ ‫ݔ‬௜௝ ቁ
௜ ௜

The integrated hybrid utility function value of the proposed approach for an alternative could be determined as
follows:

‫ܭ‬௜ ൌ ߣ σ௡௝ୀଵ Qi ൅ ሺͳ െ ߣሻ σ௡௝ୀଵ Pi Ǣ ߣ ൌ Ͳǡ ǥ ǡͳǡ Ͳ ൑ ‫ܭ‬௜ ൑ ͳǤ (2)

λ is determined based on the assumption that total of all alternatives ARAS scores must be equal to the total of MUF
scores:

σ࢓
࢏స૚ ࡼ࢏
ࣅ ൌ σ࢓ ࢓ Ǥ (3)
࢏స૚ ࡽ࢏ ାσ࢏స૚ ࡼ࢏

Final step: Rank preference order. The best alternative is one with the maximal ‫ܭ‬௜ value.
The problem of supporting supplier selection have been analysed by a number of authors. In addition, there are
numerous evaluation methods for selecting the required suppliers. Numerous researches concentrate on the problem
of selecting supplier using different methods. The pairwise comparison matrix usually consists of elements expressed
on a numerical scale to quantify the qualitative decision problem. Therefore, the first issue for a pairwise comparison
matrix is that how to develop a scale to transfer the linguistic description to the numerical values, including 9-point
Ratio Scale introduced by Saaty [2], Differences Scale proposed by Triantaphyllou and Mann [3] and the Exponential
Scales developed by Lootsma [4,5] etc.
 Jolanta Tamošaitienė et al. / Procedia Engineering 172 (2017) 1137 – 1145 1141

Fig. 2. Hybrid supplier selection model [6].

The values of elements in an initial decision-making matrix given by decision makers based on their experiences
and expertise.
However, in reality, decision makers are often facing complicated decision problems that are not structuring
hierarchically. Furthermore, the interactions of decision attributes within the same level and the feedbacks between
two different levels are important issues that should be considered during the decision making process. Therefore, the
AHP method does not work accurately when solving such decision problems [7].
1142 Jolanta Tamošaitienė et al. / Procedia Engineering 172 (2017) 1137 – 1145

Once a set of pairwise comparison matrices constructed for a problem, the priority weights of alternatives derived
from these matrices, and then a decision made in terms of the ranking order of the alternatives. Nowadays exists more
than 20 different methods that can be used to derive the weights of criteria [8, 9, 10], including the Normalization of
the Column Sum Method and Arithmetic Mean of Normalized Columns Method, the Eigenvector Method [11], and
the Direct Least Squares Method, the Weighted Least Squares Method [12], the Logarithmic Least Squares Method
[13], and Geometric Means Solution [14], the Logarithmic Goal Programming Method [15], and etc. The AHP method
is the most popular among these methods.
The typical steps of AHP include the following five steps:

1) Define the problem and decompose the problem;

2) Construct a set of pairwise comparison matrices;
3) Calculate eigenvalues and eigenvectors by Eigenvector Method;
4) Test the consistency of all comparison matrices;
5) Aggregate the final priorities of alternatives to make decision.

Saaty proposed AHP as a multiple criteria decision-making method applied to overcoming problems under
uncertain conditions. It was used to solve different problems [16,17,18].The goal of different MCDM methods is
finding the rational solution.
There proposed hybrid MCDM model to pursue the decision-maker find the rational solution. Hierarchy appraisal
and decomposition of the problem separation makes it possible to describe the problem. The goal of the proposed
model achieve a more accurate solution.
The ratio scale (intensity) and definition of AHP [19] given bellow:

1 – Equal importance;
3 – Somewhat more important;
5 – Much more important;
7 – Very much more important;
9 – Absolutely more important;
2, 4, 6, and 8 – Intermediate values.

3. A case study: selecting a supplier company

Nature of the construction work is a specifically complex array of interdependent activities, i.e. it is at best
organized chaos. Construction is a sector that accepts innovations slowly. Selection of effective technological systems
in construction is a complex multi-criteria task [20]. Clients are slow with communication. The main challenges of
construction works to managers [21,22] are as follows: changing market demand, customers’ request, and
technological advances, the work highly affected by weather and other environmental conditions [23,24,25], not exists
the same way to manage every project [26]. Multi-criteria analysis is a useful tool in many similar problems
[27,28,29,30]. By proactively addressing alternatives of supply management problems correctly, the project should
cost less, be completed more quickly and produce products more likely to meet the client’s requirements [31].
The aim of this case study is to utilize a new hybrid model of MCDM methods for selecting a supplier.

3.1. Selecting criteria and survey data

Construction Company tends to select one supplier among three partners.

A group of 10 senior experts, the majority of which have been working in the companies producing disposable
containers for at least six years, formed to solve the problem. 50 % of the respondents are BA graduates and 100 %
of those have industrial background. At the first stage was applied nominal group Delphi technique to determine the
main criteria for supplier assessment.
Eight evaluation criteria to select the best supplier used as follows (optimisation direction):
x1 – cost (minimum);
 Jolanta Tamošaitienė et al. / Procedia Engineering 172 (2017) 1137 – 1145 1143

x2 – quality (maximum);
x3 – distance (minimum);
x4 – delivery reliability (maximum);
x5 – reputation (maximum);
x6 – technology level (maximum);
x7 – compatibility (maximum);
x8 – development ability (maximum).

3.2. Supplier selection

After summarising the opinions of senior experts and the steps of AHP, the weights of evaluation criteria provided
in Table 1. The initial decision-making matrix X normalised and weighted initially and the obtained result (X) provided
in Table 2. ARAS method, originally presented by Zavadskas and Turskis [32], mainly used to solve multi-criteria
problems in construction [33,34,35]. In accordance the ARAS method and Multiplicative Utility function, the
evaluation of four suppliers computed and ranking suppliers for Construction Company is finally discovered (Table
2, and 3).

Table 1. The initial decision-making matrix and the values of evaluation criteria.
x8 x4 x2 x1 x3 x5 x6 x7
w 0.207 0.197 0.14 0.122 0.147 0.1 0.047 0.04
Opt max max max min min max max max
A1 36 32 49 23 12 37 39 36
A2 31 37 42 25 26 45 38 39
A3 41 33 44 19 32 40 42 42
A4 30 37 42 27 45 39 45 39
Optimal 50 50 50 15.9 10 50 50 50
Worst level 30.000 30.000 30.000 27.000 45.000 30.000 30.000 30.000

Table 2. Normalised matrix.

x8 x4 x2 x1 x3 x5 x6 x7 MUF Rank
w 0.207 0.197 0.14 0.122 0.147 0.1 0.047 0.04 Pi 4
Opt max max max min min max max max
A1 0.490 0.810 0.003 0.409 0.003 0.423 0.303 0.490 0.130
A2 0.903 0.423 0.160 0.672 0.209 0.063 0.360 0.303 0.296 2
A3 0.203 0.723 0.090 0.078 0.395 0.250 0.160 0.160 0.200 3
A4 1.000 0.423 0.160 1.000 1.000 0.303 0.063 0.303 0.374 1
A0 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 0

Table 3. Weighted normalised matrix.

x8 x4 x2 x1 x3 x5 x6 x7 ARAS Qi Rank
A1 0.101 0.160 0.000 0.050 0.000 0.042 0.014 0.020 0.388 0.388 3
A2 0.187 0.083 0.022 0.082 0.031 0.006 0.017 0.012 0.440 0.440 2
A3 0.042 0.142 0.013 0.010 0.058 0.025 0.008 0.006 0.303 0.303 4
A4 0.207 0.083 0.022 0.122 0.147 0.030 0.003 0.012 0.627 0.627 1
A0 0.207 0.197 0.140 0.122 0.147 0.100 0.047 0.040 1.000 1.000 0
1144 Jolanta Tamošaitienė et al. / Procedia Engineering 172 (2017) 1137 – 1145

4. Conclusion

Presented methodology allows solving supply chain management problems taking into account the inherent
interconnectivity of the processes that comprise them. It thus yields valuable insights on how such improve technology
or network configuration. There has thus been corresponding improvement in the reliability, consistency, and ease to
interpretation findings of supply chain management. The future should see more multi-criteria decision-making
support methods in supply chain applications, as well as methodological advances, including life cycle based
optimization models, dynamic supply chain management, sustainable supply chain management, and software
implementations of these new computing approaches.
In conclusion, it is possible that the relatively high impact of supply chain management on business decisions is
not only related to relatively low use of the method by decision makers in business, but also to relatively low relevance
of traditional supply chain management for such purposes.

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