Supplier Selection for Food Industry: A Combination of Taguchi Loss Function and Fuzzy Analytical Hierarchy Process

Abstract

Supplier selection is an important part of supply chain management process by which firms identify, evaluate, and establish contracts with suppliers. Deciding the right supplier can be a complex task. As such, various criteria must be taken into account to choose the best supplier. This study focused on the supply in the packaging division of a food industry in Denpasar-Bali. A combination of Taguchi Loss Function and fuzzy-AHP (Analytical Hierarchy Process Fuzzy Linear Programming) was used to determine the best supplier. In this analysis, several suppliers’ criteria were considered, namely quality, delivery, completeness, quality loss and environmental management. By maximizing the suppliers’ performances based on each criterion and aggregating the suppliers’ performances based on the overall criteria, the best supplier was determined.

Keywords: supplier selection, taguchi loss function, AHP, fuzzy linear programming,environment