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Title:

Integrating TAGUCHI Loss Function and TOPSIS to Select an Optimal Supplier


Introduction:
Process of purchasing from Suppliers is very important for competitiveness of every
organization. Decision maker always consider many criteria in supplier selection problem to find
their best supplier. Suppliers can be evaluated by using different factors such as quality, on time
delivery, price, type of service, national and international standards. Hence supplier selection
problem belong to Multi Criteria Decision Making (MCDM). Some other factors are also
considered in this project for the evaluation of suppliers. This project presents integration of the
Taguchi loss function and Topsis method to select an optimal supplier in supply chain
management of an industry.

Problem Statement & Objectives:

The Problem which we have identified in Polish Oil and Gas is the poor selection of the
suppliers. They are facing many problems for supplier selection process. Through
existing suppliers selection processes, selected suppliers are unable to meet the criteria
of Low Cost, High Quality, Less Delivery time & Excellent Service.

Sources of the Suppliers:

Sources of Supplier Information


Published Sources

Internal Sources

Personal Contacts International Source

CandidateList
Formulation of Selection Criteria
Information from
Market Research

Preliminary Screening

Elimination
of Unqualified
Candidates

Identification of Qualified Candidates

Questionnaires
Financial Information

Detailed Study

Rejected
Suppliers

Supplier Visits

Selected Supplier
Non-approved Suppliers
Approved Supplier List

Proposed Method:

Supply chain process and potential suppliers are identified of


20 inch casing which is selected as a product.
Supplier selection questionnaire is prepared and data is
collected from decision makers of an industry.
Taguchi Loss Function is applied to calculate the losses from
each supplier.

TOPSIS method is applied to rank the suppliers.


The optimal supplier is selected on the basis of results.

Multi criteria decision making (MCDM):


After discussion with the top management and decision makers,
Suppliers selection is a multi- criteria decision making problem.
Supplier selection is a difficult task for managers because the
performances of suppliers are varied based on each criterion. The
criteria

used

here

are

quality,

price,

Delivery

time,

service,

Production

capacity,

Financial Position, performance history. The results are calculated


using Taguchi Loss Function and TOPSIS method for optimal
selection of suppliers.

Losses from Different Suppliers


100
80
60
40
20
0

Altrex (EC)
V & M (France)

Boma (UAE)
Sumitomo (Japan)

Tenaris (Argentina)
P.T.Citra (Indonesia)

Ranking Chart of Suppliers


P.T.Citra (Indonesia); 25%

Sumitomo (Japan); 21%

Altrex (EC); 10%


Boma (UAE); 13%

Tenaris (Argentina); 17%

V & M (France); 14%

CONCLUSION:
When something is measured it eventually improves.
With the implementation of multi-criteria supplier selection
method the highest ranked supplier P.T Citra (Indonesia) is

selected with Low cost, High Quality, Less Delivery Time and
with excellent service.

Optimal supplier selection Picture.


Isko b khi paste kr di end me....or colour combination b fit
sa rakhi..

company ka logo hai ye..ye b


laga di..jis trha sample me lagaya hua hai..UET k logo ki
trha..
Names:

Ahsen Ali
Hafiz Mohsin Tariq
Registration Number:
11-IE-06
11-IE-22
Project Supervisor:
Engr. Abid Ali