Supplier Selection Using Analytic Hierarchy Process Approach: A case study in the retail toy company.

Supplier selection is one of the most vital functions of a retail supply chain. Every demand should match a supply. By deciding the best supplier to fulfil a demand, retail companies can save material and service costs and optimize profits. However, this decision becomes complex for business managers because of multiple suppliers, criteria, and parameters. On the contrary, having only one supplier to satisfy multiple demands may also rapture the supply chain and lead to uncertainty and profit loss. Thus, to increase the company’s profits, multi-criteria decision-making tools are used for supplier selection problems. One of these decision-making tools is the Analytic Hierarchy Process (AHP) approach. Previous research has been done for supplier selection using AHP in various industries. This case study aims to propose a decision model for supplier selection using the AHP approach which is later applied to a retail toy company. The objective is to optimize company profit. Through this approach, an optimization could be made for further supply selectors. Based on AHP approach’s result, it is shown that one out of three alternative suppliers have fulfilled the criteria that can give the highest profit for a small-medium enterprise (MSE) retail toy company.