Professional Documents
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Vipin Mathew
Assistant Professor
Department of Mechanical Engineering
Mangalam college of Engineeering Ettumanoor
Abstract
The aim of this paper is to determine the appropriate supplier providing the most customer satisfaction for the criteria identified
in the Reverse supply chain Management. The choice of suppliers and their performance assessment are becoming major
challenges that face supply chain managers or directors especially in Reverse Supply Chain Management. Evaluating suppliers
and selecting one of them are complicated tasks due to the fact that various criteria or objectives must be considered in the
decision making process. Also in many real world cases the criteria are not equally important for the purchase managers. In this
study, we proposed a supplier selection analysis model considering both Shannon Entropy and Technique for Order Preference
by Similarity to Ideal Solution (TOPSIS) method. Subjective and objective opinions of purchase managers/experts is turned into
quantitative form using Shannon Entropy. TOPSIS technique is used for calculating the suppliers ratings.
Keywords: Supplier Selection, , Shannon Entropy, Reverse Supply Chain Management, TOPSIS Method.
________________________________________________________________________________________________________
I. INTRODUCTION
Vendor Selection deals with choosing the right vendor or supplier who will be able to provide the right product at right time at
right price. The purchase manager is ought to consider variety of criteria like cost, quality, technology reuse of resources,
pollution caused etc. Choosing the right vendor based on these criteria is a cumbersome task as profit is a main concern that gets
affected by the selection. In Reverse Supply Chain management, evaluating suppliers and selecting best among them are
complicated tasks due to the fact that various criterias such as Technology, Reuse of resource, Pollutant emission must be
considered in the decision making process.
materials from few suppliers is another problem. Hence rise in the overall cost of Production due to improper supplier evaluation
and review technique seems to be a major problem faced by the company.
The problem statement is Lack of a system to find the quality of recycled raw materials used in the production of rubber
products.
Month
Table 1
Rejection of Raw Materials In Kg
Purchase Demand Wastage Quantity after rejection
Aug-14
25720
25360
840
24880
Sep-14
25600
25320
730
24870
Oct-14
25860
25320
845
25015
Nov-14
25500
25200
820
24680
Dec-14
26000
25400
875
25125
Jan-15
26000
25500
850
25150
Feb-15
26300
25700
900
25400
Mar-15
26300
26000
870
25430
Apr-15
26500
26000
920
25580
May-15
26500
26000
900
25600
Jun-15
25000
24500
825
24175
Jul-15
25000
24500
850
24150
Aug-15
25000
24700
890
24110
The table shows the rate of rejection. The wastage and quantity after rejection is produced in kg is shown. This rejection of
raw materials leads to lowered rate of production, means quantity after rejection doesnt meet the demand.
V. PROCEDURE
A. Stage 1
Supplier rating process
Supplier rating shall be calculated by giving due weight-age for each of the following.
1) Quality rating : 60 points
2) Delivery rating : 15 points
3) Service rating : 20 points
4) Organizational rating : 5 points
SR=QR+DR+SR+OR
1) Quality rating(QR): Quality rating for a consignment/lot is given below.
QR= (Q1+ x*Q2/Q)*60
Where Q1=quantity accepted, Q2= quantity accepted with deviation, Q =total quantity supplied, X=demerit fact
2) Delivery rating
DR=(D1/D)*15
Where D1=promised delivery time, D= actual delivery time
3) Service rating
SR=S1+S2+S3+S4
Where S1=cooperation and readiness to help emergencies promptness in reply S2= readiness to replace rejected materials and
providing supporting documents S3= cooperation in delivery, developing and implementing measures of improvement, S4=
attractive credit statement
4). Organizational Rating (OR): Due weight age shall be given for government organization and other organizations having
ISO9000 certification. Maximum 5 points shall be awarded for governmental / ISO certified Organizations.
B. Stage 2:
The proposed method for vendor fixation uses Shannon entropy and takes into six criteria viz. Cost, Service
Technology, Quality, Reuse Of Resource and Pollutant Emission.
Steps of Shannon Entropy for fixation of Vendors are:
1) Scale the Criteria according to the goal and represent in the form of a matrix
2) Normalize the matrix
3) Compute the entropy matrix Ej using the formula :
m
e j e0 Pij ln Pij
j 1,2,3,......, n
i 1
e0 (ln m) 1
Table - 2
Entropy Matrix
Criteria/ supplier
CC
CS
CQ
CT
CR
CP
0.1831
0.1285
0.1796
0.1667
0.1250
0.1516
0.1323
0.2016
0.1667
0.1156
0.1551
0.1879
0.1627
0.1796
0.1008
0.1824
0.1763
0.1516
0.1627
0.1285
0.1796
0.1667
0.1907
0.1730
0.1961
0.1588
0.1895
0.1667
0.1551
0.1217
0.1323
0.1588
0.1499
0.1824
0.1763
0.1879
ej
0.9690
0.9559
0.9662
0.9803
0.9785
0.9738
Cost
Service
Quality
Technology
Reuse of Resources
Pollutant Emission
Weight
0.1759
0.2502
0.1919
0.1115
0.1218
0.1487
C. Stage 3:
Once the weight of all criteria are obtained we can use TOPSIS, which is a simple and useful technique to rank the number of
suppliers needed to be considered.
Steps in TOPSIS are:
1) Calculate the Decision matrix.
2) Normalize the Decision matrix.
3) Calculate the weighted normalized decision matrix.
Table - 4
Weighted Normalized Matrix
0.1759 0.2502 0.1919 0.1115
0.1218
0.1487
Criteria/ Supplier
CC
CS
CQ
CT
CR
CP
0.0806
0.0813
0.0859
0.0460
0.0378
0.0561
0.0582
0.1276
0.0797
0.0319
0.0469
0.0696
0.0716
0.1137
0.0482
0.0503
0.0533
0.0561
0.0716
0.0813
0.0859
0.0460
0.0576
0.0640
0.0863
0.1005
0.0907
0.0460
0.0469
0.0450
0.0582
0.1005
0.0717
0.0503
0.0533
0.0696
RC i
di
di di
*
i= 1,2,3.,n
d-
Ci
Rank
0.0528
0.0474
0.4731
0.0369
0.0618
0.6259
0.0491
0.0439
0.4722
0.0493
0.0506
0.5066
0.0383
0.0569
0.5977
0.0436
0.0459
0.5129
D. Stage 4:
The combined Shannon Entropy and TOPSIS method can be coded in MATLAB, so that any company can use this method to
find the best vendor. Also since the number of vendors is to be entered by the user, this method can be applied to find the best
among any number of suppliers.
VI. RESULT
The combination of Shannon Entropy and TOPSIS method is very well suited to find the suitable vendor multiple alternatives.
When comparing the existing method that gives more weightage for ISO certified vendors, the proposed Shannon EntropyTOPSIS method takes into consideration various criteria and helps in choosing the right vendor with maximum profit and
customer satisfaction.
VII. CONCLUSION
Main purpose of this paper is to combine Shannon Entropy and TOPSIS methods to determine supplier providing the most
customer satisfaction for the criteria identified in the Reverse supply chain Management. By proper supplier selection using
Shannon Entropy and TOPSIS best supplier is selected ,so that quality and supplier selection problem in reverse supply chain
management can be improved ,so that rejection rate of raw materials can be decreased.
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