Chapter 2 Literature Review
2.2 Papers Related to the Applications of Analytic Hierarchy Process (AHP)
Kivijarvi and Tuominen (1991) suggested that in a long-term investment, the decision maker should use not only the quantitative analysis but should also use the qualitative analysis in regard to the goal of the organization. In their research, they applied the AHP with both quantitative and qualitative analyses in evaluation of the investment to decide whether to build a new logistics system or improve the current one. They also compared the result between quantitative analysis only and quantitative with qualitative analysis, and they found that the outcomes are very different. Korpela and Tuominen (1996) presented an integrated of AHP approach to warehouse site selection process, where both quantitative and qualitative aspects were considered. The main objective of the warehouse site selection was to optimize the inventory policies, enable smooth and efficient transportation facilities, and decide on various aspects such as location and size of stocking points etc., as related to logistics system design.
Ghodsypour and O’Brien (1998) combined the AHP and Linear Programming (LP) in designing a DSS (Decision Supporting System) that can evaluate various suppliers. In their research, management needs to prioritize firstly a group of approved list of suppliers and secondly how many products to order from them. They suggest that it is possible that there is a conflict between quantitative and qualitative criteria. The qualitative analysis within the AHP model, however, enables them to analyze it alongside quantitative analysis. After that, the LP is employed to recommend the selected suppliers and number of products needed from them.
Korpela and Lehmusvavra (1999) studied a general logistics distribution problem. It is to determine: (i) which third-party warehouse operators are selected to serve the customers; (ii) how many products are distributed to the customers. In their approach, the AHP was used first to measure the relative importance weightings of alternative operators based on three criteria:
reliability, flexibility, and customer’s logistics costs. The AHP weightings were then used as weighting factors in the objective function of the mixed integer linear programming model (MILP), with the objective of maximizing customers’ satisfaction. Akarte et al. (2001)
developed a web-based AHP system to evaluate the casting suppliers with respect to 18 criteria. In the system, suppliers had to register, and then input their casting specifications. To evaluate the suppliers, buyers had to determine the relative importance weightings for the criteria based on the casting specifications, and then assigned the performance rating for each criterion using a pairwise comparison.
Chuang (2001) applied the combined AHP–QFD approach to deal with the facility location problem. In the approach, a QFD matrix relating the location requirements (e.g., fast distribution ability, quick response to requirements, and so on) to location evaluating criteria (e.g., initial and operating costs, transportation conditions, and so on) was constructed. Based on the relative importance weightings of the location requirements obtained by using the AHP as well as the relationship between the requirements and evaluating criteria, the normalized importance degree of the evaluating criteria could be computed. The AHP was applied again to determine the relative importance weightings of alternative locations with respect to each evaluating criterion. A location with the highest total score was selected. Chan (2003) developed an interactive selection model with AHP to facilitate decision makers in selecting suppliers. The model was so-called because it incorporated a method called chain of interaction, which was deployed to determine the relative importance of evaluating criteria without subjective human judgment. AHP was only applied to generate the overall score for alternative suppliers based on the relative importance ratings.
Chan and Chan (2004) reported a case study to illustrate an innovative model which adopts AHP and quality management system principles in the development of the supplier selection model. Using the AHP model, the criteria for vendor selection are clearly identified and the problem is structured systematically. This enables decision makers to examine the strengths and weaknesses of the supplier by comparing them with respect to appropriate criteria and sub criteria. Moreover, the use of the proposed AHP model can significantly reduce the time and effort in decision making. In addition, the results can be transferred to a spreadsheet for easy computations. It is easier for the evaluation team to arrive at a consensus decision. The AHP model implementation framework in their study can be used as a basis for carrying out supplier selection activity in a certified company.
Chow and Luk (2005) exercised measuring service quality in fast-food industry and developed an AHP approach that would help managers to identify which service dimensions (reliability, assurance, tangibles, empathy, and responsiveness) required attention to create a sustainable competitive advantage, and also act as a comparative service improvement technique. It seems that there is no study in the literature that uses AHP for measuring physical distribution service quality, and the present study is the first one. Tudela et al. (2006) compared the output of cost‐benefit and multi‐criteria analyses by considering the urban transport investments. A main conclusion from the results is that the decision‐making process needs to formally incorporate other aspects, apart from the economic ones. Furthermore, public opinion should be taken into account, explicitly into the decision‐making, particularly when information regarding the projects that will affect them can be provided by the authority in an accurately and timely fashion.
Yoo and Choi (2006) used the AHP approach for identifying important factors to improve passenger security checks at airports. The researchers prepared a survey questionnaire to gather data from experienced screeners and supervisors working at screening points around the airport. The gathered data was analyzed by using the AHP methodology to formulate a model. Xia and Wu (2007) incorporated AHP into the multi-objective mixed integer programming model for supplier selection. The model applied AHP to calculate the performance scores of potential suppliers first. The scores were then used as coefficients of one of the four objective functions. The model was used to determine the optimal number of suppliers, select the best set of suppliers, and to determine the optimal order quantity.
Efendigil et al. (2008) proposed a holistic approach to select 3PL for reverse logistic that can be used for more general logistic regarding specific criteria. They proposed an integrated conceptual framework combining artificial intelligence and fuzzy logic to assist managers in determining the most appropriate 3PL. Method application is divided in process phases and is performed by a team from the contracting enterprise. The AHP method is used initially for weighing defined criteria that use operational, strategic and external measures. Proposed tool is used to evaluate and select 3PL providers.
Kandakoglu et al. (2009) proposed a structured multi‐methodological approach based on the AHP and TOPSIS to support the critical decision process of shipping registry selection.
Park et al. (2009) applied AHP to evaluate the competitiveness of air cargo express services.
They explored the relative importance of factors that influence the adoption of an air express delivery service, and evaluated the competitiveness of air cargo express carriers in the Korean market. They reported that AHP analysis shows that accuracy and promptness are the two most influential factors for competitiveness, and that DHL is most competitive in the Korean market, followed by FedEx, TNT, EMS, and UPS. Table 2 summarizes the AHP’s application for the above papers
Table 2 The applications of analytic hierarchy process (AHP) in various papers
Application Paper
Production-distribution in a long term investment Kivijarvi and Tuominen (1991)
The warehouse site selection on various aspects Korpela and Tuominen (1996)
A general logistics distribution problem Korpela and Lehmusvavra (1999)
The facility location problem Chuang (2001)
To facilitate decision makers in selecting suppliers
Chan (2003), Xia and Wu (2007), Akarte et al. (2001), Ghodsypour and O’Brien
(1998),
Chan and Chan (2004) The measuring physical distribution service quality Chow and Luk (2005) Considering an application to urban transport investments Tudela et al. (2006) Improving passenger security checks at airports Yoo and Choi (2006) A holistic approach to select 3PL for reverse logistic Efendigil et al. (2008) The critical decision process of shipping registry selection Kandakoglu et al. (2009) Evaluating the competitiveness of air cargo express service Park et al. (2009)