Evaluation of supplier performance in retail industry using data envelopment analysis and analytical hierarchy process

ABSTRACTMaster ThesisEvaluation of Supplier Performance in Retail Industry UsingData Envelopment Analysis and Analytical Hierarchy ProcessTimur TURGUTLUDokuz Eylul UniversityInstitute Of Social SciencesDepartment of EconometricsIncreasing competition among the corporations in the global market istoday leaving the stage to the competition among the network of corporations.Leading this competition requires increasing productivity, minimizing costsand customer response times. An efficient supply-chain and performance-based supply-chain management as well as other within-corporationprocesses are vital to reach these objectives. Suppliers are one of the mostimportant chains of the supply-chain. The quality of products, total costs andcustomer satisfaction under these circumstances are directly affected by thesupplier performance. Hence, supplier evaluation has a strategic importancefor the corporations. The results reached by using the right performancecriteria and evaluation method would produce robust solutions towardsimproving the performance of suppliers.Retail, in Turkey and worldwide, is a rapidly developing industry wherecompetition is significantly high. Since the retail process does not involveany production phase the supplier relations have a dominant role. To this end,this study, first, aims to propose performance criteria for the suppliers in retailindustry. Another objective of this study is to propose and compare twomethods that can be used in performance evaluation. The first method is amathematical programming method, Data Envelopment Analysis. A multiple-criteria based decision-making method, Analytical Hierarchy Process is theother method. In this study, both methods are used to evaluate theperformance of the suppliers of a national retailing firm in 2005 and the resultsare analyzed in detail. The consistency of the findings of these methods isalso tested statistically.Key Words: 1) Data Envelopment Analysis, 2) Analytical Hierarchy Process,3) Supply Chain Management, 4) Performance Evaluation, 5) Retail Industry.