AHP is a multi-criteria decision making method developed in the 1970s to solve complex decision problems. It breaks problems down into a hierarchy with criteria and alternatives, then uses pairwise comparisons to determine priorities. AHP can handle both quantitative and qualitative factors, and subjective judgments. It has been used by companies like Xerox, IBM, and Ford for supplier selection, which is important for controlling costs. AHP models supplier selection with criteria in a hierarchy, then evaluates suppliers on each criteria using techniques like pairwise comparisons to identify the best supplier match.

2. AHP was developed by Thomas L. Saaty in the
1970s, it is designed to solve complex multi-criteria
decision problems.
It is based on the human ability to make
sound judgments about small problems.
It breaks down a problem into its smaller
constituent parts and brings in simple pair
wise comparison judgment to obtain the
priorities in the hierarchy.

3. AHP can deal with complex and unstructured
problem.
Its simple to use and understand
Can handle subjective judgments of
individuals

4. Xerox, IBM, British Airways, Ford Motor
Company, American Army etc

5. Supplier selection is one of the most
important components of purchasing and
supply chain management for many
companies. Supplier selection is of particular
importance if companies spend a high
portion of capital on supply and supply costs
count a significant part of the total cost

6. PRODUCT
ANALYSIS
SUPPLIER
IDENTIFICATION
SUPPLIER
EVALUATION
SUPPLIER
SELECTION

7. It is a comparison of suppliers using a common
set of criteria and measures, to identify suppliers with
the highest potential for meeting the needs of the firm
consistently
Selecting the right supplier significantly reduces the
purchasing cost and improve corporate competitiveness
Commonly adopted Supplier Selection Techniques are:
Categorical
Weighted Point
Cost Ratio
Analytic Hierarchy Process (AHP)
Supplier selection problems are often:
Multi criteria
Unstructured
Involve both quantitative and qualitative factors

8. Level 1--------- objective
Level 2--------- primary criteria
Level 3--------- secondary criteria
Level 4--------- alternatives

10. It is the process in which each supplier is
accessed and evaluated on the basis of each
lowest level criteria
Different evaluation techniques are
used, based on the nature of each criteria:
Pair wise Comparisons
Pair wise Comparisons using Equivalent Scale
Direct Input of Quantitative Data

11. The Supplier Selection Model using AHP
improves Supplier Selection Process:
Both tangible and intangible factors can be
included in the process
Using pair wise comparisons reduced
dependency of the system on human
judgment
The organizational preferences and policies
are reflected in the relative weights of the
criteria