Fuzzy MCDM Approach for Make or Buy Decision Problem

Abstract

Make or buy decision answers a fundamental question in the development of a manufacturing strategy. It requires consideration of both quantitative and qualitative factors diverging in a broad range. This study presents a two-stage decision model which incorporates fuzzy multi-criteria decision making methods to support make or buy decision of a company operating in the wood building products sector. The first stage comprises fuzzy SAW (Simple Additive Weighting) method to evaluate the decision on market entry, then the second stage integrates fuzzy SAW and fuzzy VIKOR (Multi-criteria optimization and compromise solution) methods to evaluate sourcing options. Proposed approach is demonstrated on an example invoked from a real-life problem. Then, sensitivity analysis is conducted to test the robustness of the models.