Asian Journal of Management Sciences & Education Vol. 11(1) January-April 2022__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

IMPLEMENTATION OF MULTI-CRITERIA DECISION MAKING(MCDM) IN SUPPLIER SELECTION FOR RAW MATERIAL
Selvy Athia1, Rahmad Wijaya2, Kenny Roz3
Faculty Economics and Business, Management, University Muhammadiyah of Malang,
INDONESIA.
1selvyathia@gmail.com, 2 rahmad@umm.ac.id, 3firdauskenny@umm.ac.id

ABSTRACTThe purpose of this study is to determine the priority order of the criteria, sub-criteria,then determine which suppliers CV Sumber Logam company can choose. The
population in this study is the decision maker and management of CV Sumber Logam.
The sampling technique used was purposive sampling in order to obtain 7 people. The
data analysis technique in this study used the Analytical Hierarchy Process (AHP),
while the analytical tool used was expert choice 11. The results of the analysis of thisstudy obtained the importance weight of the criteria with the first priority is quality(0.44), price (0,30), delivery (0.11), warranty & service complaints (0.07), the lastpriority is performance history (0.06). Meanwhile, the results of the assessment of thelevel of alternative importance in supplier selection show that supplier X (0.479) has
the highest weight, the second supplier Y (0.291), and the third supplier Z (0.230). The
results of this calculation can be used by the company as a consideration in
determining the next supplier selection policy.
Keywords: Analytical Hierarchy Process (AHP), expert choice, supplier selection,
supply chain management

INTRODUCTION
Companies engaged in manufacturing are companies that change or convert raw materials andtheir supporting materials into finished goods. One of the activities that cannot be separated andimportant for manufacturing companies is supply chain management. Heizer & Render (2014)
explain that Supply Chain Management (SCM) or supply chain management is a series ofintegrated activities, from procuring materials and services, then turning them into semi-finishedor finished goods, and distributing them to consumers. Supply Chain Management is also an
integrated operating system that starts with purchasing, production, and stops at consumers(Jihadi et al., 2020). Companies also need good quality raw materials so that the products they
produce are good too. Therefore, raw material suppliers who have good credibility and can betrusted are needed, so that the raw materials supplied are raw materials with guaranteed quality
so that they can increase the company's competitiveness in terms of products (Andani &Koesdiningsih, 2019).
CV Sumber Logam is a manufacturing company engaged in aluminum smelting. The resulting
product is in the form of aluminum ingot bars. The products produced by this company will be
distributed to three companies, namely PT Sinar Mas Autopart, PT Roixin Logam, and PT
SASS Nakayama. These three companies are companies that produce vehicle spare parts.
Therefore, the production demand for aluminum ingots in table 1 is constant every month.
There are obstacles that occur within the company, namely the raw materials supplied by twoCorresponding author: Kenny Roz, firdauskenny@umm.ac.id

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suppliers are not sufficient because the supplier only has a maximum raw material capacity of
550 tons per month and 300 tons per month, while the company also has other regularcustomers.
Table 1. Production Data CV Sumber Logam 2020-2021
MonthJanuary
February
March
April
May
June
July
AugustSeptember
OctoberNovember
DecemberJanuary
FebruaryMarch

Raw Material
170 ton170 ton170 ton170 ton170 ton170 ton170 ton170 ton170 ton170 ton170 ton170 ton
510 ton
510 ton
510 ton

Production
50 ton
50 ton
50 ton
50 ton
50 ton
50 ton
50 ton
50 ton
50 ton
50 ton
50 ton
50 ton150 ton
150 ton
150 tonSouce: Data Report (2021)
The raw material in the form of aluminum scrap which is supplied as much as 170 tons isonly able to produce 50 tons of aluminum ingot because the material goes through themelting process and the filtering process with the final result being the weight per 1
aluminum ingot bar of 15 kg. With the constraints that occur if you only depend on two
suppliers, CV Sumber Logam is ultimately unable to meet consumer demand on time. For
this reason, a supplier of new raw materials is needed to meet the needs of the two new
customers. Until now, CV Sumber Logam has had difficulties in selecting a supplier because
the company choose the supplier based on relationship factors with suppliers and do not pay
attention to criteria that can affect company performance.
CV Sumber Logam has selected three potential suppliers and the criteria for selecting
suppliers will be adjusted to the condition of the company and the standard of the products tobe produced. To make it easier to make new supplier selection decisions and knowing thecriteria that can be considered by the company in selecting suppliers there is an analysis tool,
namely Analytical Hierarchy Process (AHP). The AHP method is an easy-to-understandmethod and a framework for making decisions effectively on complex problems by
simplifying and accelerating the decision-making process by solving complex problems bystructuring a hierarchy of criteria, interested parties, results and by drawing various
considerations in order to develop weights. or priority (Alam Syah, 2014)
LITERATURE REVIEWSupply Chain Management
Supply chain is a system in which an organization distributes its products and services to its
customers. This chain consists of a network of various interconnected organizations that havethe same goal, namely the best possible procurement of these goods (Setiawan & Setiyadi,
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2017) . Heizer & Render (2017) reveal that the purpose of supply chain management is tocoordinate companies tend to determine suppliers activities in the supply chain to maximize
the competitive advantage and benefits of the supply chain for the end consumer. Supply
chain management is increasingly becoming a major management tasks so that supply chain
managers need to be moved to the position of top management to ensure that the allocation ofduties, responsibilities and authority of the supply chain is handled at the strategic level(Purwani & Nurcholis, 2016).
Today's competitive industrial environment, it is impossible to successfully produce at a low
cost, and produce quality products without a satisfactory supplier. According to Heizer &Render (2014) supplier selection must consider various factors, namely strategic fit, suppliercompetence, delivery and quality performance factors. Proper identification of vendors isimportant for increasing the efficiency of service organisation as per the need (Kumar & Roy,2011). The criteria according to Pirogo & Rumita (2017) are quality, cost, flexibility, delivery,
responsiveness (QCFDR). Companies must be able to have competence in various areas andbe able to have extraordinary competences. Supplier selection can be an important process.
According to Dickson, (1966) twenty-one criteria for selecting and evaluating suppliers canbe seen in table 2 :
No
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21

Table 2. Supplier Selection / Evaluation Criteria
Criteria
Quality
Delivery
Performance History
Warranties and Claim Policies
Price
Technical Capability
Financial Position
Prosedural Compliance
Communication System
Reputation and Position in Industry
Desire for Business
Management and Organization
Operating Controls
Attitudes
Impression
Packaging Ability
Labor Relations Records
Geographical Location
Amount of past businessTraining Aids
Reciprocal Arrangements

Source : Suci Oktri Viarani (2015) ; Heizer & Render (2014)
Analytical Hierarchy Process
Bahadir & Kursun (2015) Multi-criteria decision methods (MCDM) are used to solve avariety of decision-making problems through an evaluation method based on selection ofmultiple criteria among alternatives. One of the MCDM methods is AHP. Analytical
Hierarchy Process is a decision making method that involves a number of criteria andalternatives that are selected based on the consideration of all related criteria. This method
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can be used for complex structures, multi-person, multi- attribute, and multi-period
hierarchical problems (Viarani, 2015).
AHP is a highly flexible decision-making
methodology that can be applied in a wide variety of situations with problems of multiple
criteria, including supplier- selection decisions, facility-location decisions, forecasting, risks
and opportunities modeling, choice of technology, plan and product design, and so on. AHP
allows decision makers to structure complex problems in the form of hierarchical manner or aset of integrated levels, having a certain number of levels from the root (objective) to theleaves (alternatives) (Chan & Kai, 2010).
Haryanto & Sadeyah (2018) to solve problems with the AHP method, there are several basic
principles that must be understood, including decomposition (creating a hierarchy) solve or
divide a complete problem into its elements into a hierarchical form of the decision-making
process, where each element or element is interrelated. Then, comparative judgment(assessment of criteria and alternatives). Criteria and alternatives are carried out by pairwise
comparisons. According to Saaty, (1993) for various problems, a scale of 1 to 9 is the bestscale for expressing opinions. Synthesis of Priority Synthesis of priority is carried out using
the eigen vector method to obtain relative weights for decision-making elements. Weights orpriorities are calculated by matrix manipulation or by solving mathematical equations. Last,
logical consistency, consistency has two meanings. First, similar objects can be grouped
according to uniformity and relevance. Second, regarding the level of relationship between
objects based on certain criteria.
METHOD
The research conducted is a quantitative descriptive study. The population of this study were
the decision makers and management of CV. Sumber Logam, as many as 7 people fromoperational managers, supervisors in the production department who are responsible formaintaining the stability of raw materials.. The sampling technique was carried out by
purposive sampling, namely sampling based on certain considerations. Respondents who are
involved must also have sufficient knowledge and experience about the problem. Therefore,
the respondents in this study were the main director, head of purchasing and warehousing,head of production, head of finance, two employees in warehousing and purchasing, andemployees in the production department. Data obtained from interviews, questionnaires anddocumentation.
The variables used for supplier selection in this study were obtained from the results of indepth interviews, namely the first criterion is price. Price focuses on the price agreement
made or nominal value measured in units of money between the supplier and the company.
Price criteria are developed into suitability for raw material prices (H1), ability to provide
discount orders in a certain amount (H2), suitability in providing raw material shipping costs(H3). The second criterion is quality. The quality of aluminum scrap raw materials is
measured by the level of cleanliness of the raw materials, no sand or paper, no mixing of ironor other materials other than aluminum, and the dryness of the materials in the sense that the
raw materials are not wet. This criterion was further developed into sub-criteria, namely thesuitability of goods with the desired specifications (Q1), the ability to provide consistentquality (Q2). The third criterion is warranties and claim policies (warranty and service
complaints). This attribute focuses on warranty and service complaints against suppliers. This
attribute was further developed into ease of claim processing (W1), guarantee of goods ontime (W2), speed of responding to complaints (W3), responsiveness in resolving customer
complaints (W4). The fourth criterion is delivery. This attribute focuses on the supplier's
ability to timeliness (how long it takes to complete, respond to, correct, or complete). This
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attribute is further developed into the ability to deliver goods according to the agreed date(D1), the ability to select the means of transportation for the delivery of raw materials (D2),the accuracy of the quantity in the shipment of raw materials (D3).The fifth criterion is
performance history (previous performance achievements). This attribute focuses on the
supplier's fulfillment ability based on the company's previous performance. This attribute is
further developed into the ability to comply with the set schedule (P1), the ability to maintaincontract agreements (P2).
The data analysis used in this research is AHP (Analitycal Hierarchy Process) method.
Calculations can use manual or Microsoft Excel help and expert choice software. The steps in
the AHP method are as follows the first is to construct a hierarchical structure of the problem.
(Oktavia et al., 2017) The hierarchical form consists of the criteria and sub-criteria used forsupplier selection

Figure 1. Structur Hierarchy CV Sumber Logam
Second, calculate the weight / priority at level 1 (criteria) by making pairwise comparisons ofeach criterion. To get the value from pairwise comparisons, that is to calculate the geometricmean from the results of respondents' assessments
G = 𝑛√X1 , X 2 , X 3 , … … , X 𝑛 ………..

G = geometric mean
Xn = Respondent's assessment 1,2,3… .n
N = Number of ratings
Create a pairwise comparison matrix from the value of each paired comparison, then divide
each element by the sum value. The results are normalized to obtain the matrix eigenvector
by averaging the number of rows against the criteria. The eigenvector value is the priority
weight for each criterion. Furthermore, the consistency measurement, multiplying the initialcomparison matrix value by the weight, multiplying the number of rows by the weight.
λmaks is obtained from the result of adding the multiplication result above with n.
Consistency index formula:
CI = (λmax - n) / (n - 1)
CI = consistency index
λmax = maximum eigenvaluen = Number of elements
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Then the priority synthesis is carried out. This consistency measurement is to see theinconsistency of the responses given by respondents.
CR = CI / RI
CR = Consistency Ratio
CI = Consistency Index
RI = Index Random Consistency
If the Index Random Consistency (CR) value is <0.1 then the pairwise comparison value inthe given criteria matrix is consistent and vice versa if the Index Random Consistency (CR)value is> 0.1 then the paired comparison value on the given criteria matrix is not consistent.
So if the values are not consistent, it is necessary to repeat the values in the paired matrix on
the criteria and alternative elements. Next, calculate the weight / priority of each variable at
level 2 (sub-criteria) of each criterion as in the second step above. Then determine the global
priority by multiplying the local priority / priority of each sub-criteria with the priority
criteria. Calculating the weight / priority of each variable at level 3 (alternative), namely theweight of each supplier compared to each sub-criteria as in the second calculation above.
After knowing the weight of each sub-criteria and each supplier, then to find out which
supplier can be selected, namely the overall value of the multiplication of supplier weights
and sub-criteria weights. The supplier chosen is the one with the highest weight / value.
RESULT AND DISCUSSION
There are three levels to be analyzed using the AHP method with the aim of knowing theweight / priority importance of each variable. At level 1 (criteria), namely price, quality,
warranty and service complaints, delivery, and performance history, level 2 (sub-criteria),
and level 3 alternative suppliers. The data used to measure the priority interests of the subcriteria for each supplier selection criteria were obtained through a questionnaire distributed
to 7 respondents. Measurement of priority importance and criteria is carried out from
respondents' ratings, then the results are averaged using geometric mean (geometric mean).
This is done because AHP only requires one answer, the results of the geomean from 7
respondents in table 3 are as follows
Table 3. Assessment of Priority Interest Criteria in Supplier Selection
Criteria
Cost
Quality
Warranty &Complaints
Service
Delivery
Perfomance
History

Warranty&
Perfomance
Cost Quality Complaints Delivery
History
Service
1
0,51
3,77
4,40
4,51
1,96 1
5,01
5,19
4,72
0,27

0,20

1

0,39

1,11

0,23

0,19

2,56

1

2,15

0,22

0,21

0,90

0,47

1

From the calculation of pairwise comparisons between variables in choosing suppliers, thefollowing figure 2 weights are obtained:

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Figure 2. Synthesis of Raw Material Selection Criteria
Based on Figure 2, the quality criteria have the highest first weight with a total of 0.44, thenthe second priority is the price criteria with a weight of 0.30, the third priority is the delivery
criteria with a weight of 0.11, the fourth priority is warranty and complaint services with aweight of 0, 07, the fifth priority is performance history criteria with a total weight of 0.06.
As for calculating level 2 sub-criteria and level 3 alternative suppliers for each sub-criteria is
the same as the calculation for level 1 (criteria). After getting the values on the criteria andalternatives, a synthesis is carried out in order to get the overall weight value and get the best
supplier results.
Table 4. Priority Global
Level 0(Goals)Selectionof the best
supplier

Level 1
(Criteria)

Cost

Level 2
(Subcriteria)
H1

WeightAlternative

Weight0,19

Supplier X

0,089

Supplier Y

0,076

Supplier Z

0,025

Supplier X

0,039

Supplier Y

0,010

Supplier Z

0,021

Supplier X

0,019

Supplier Y

0,005

Supplier Z

0,016

Supplier X

0,170

Supplier Y
Supplier Z

0,103
0,057

Supplier X

0,046

Supplier Y

0,043

Supplier Z

0,021

Supplier X

0,002

Supplier Y

0,007

Supplier Z

0,001

Supplier X

0,007

Supplier Y

0,002

Supplier Z

0,001(0,30)
H2

H3

Quality

Q1

0,07

0,04

0,33

(0,44)
Q2

Warranties&Complaints Service(0,07)

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W1

W2

0,11

0,01

0,01

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W4

Delivery

D1

0,02

0,03

0,06

(0,11)
D2

D3

Perfomance History

P1

0,02

0,05

0,01

(0,06)
P2

0,05

Supplier X

0,010

Supplier Y

0,006

Supplier Z

0,004

Supplier X

0,004

Supplier Y

0,023

Supplier Z

0,003

Supplier X

0,022

Supplier Y

0,014

Supplier Z

0,012

Supplier X

0,005

Supplier Y

0,003

Supplier Z

0,008

Supplier X

0,018

Supplier Y

0,014

Supplier Z

0,006

Supplier X

0,005

Supplier Y

0,003

Supplier Z

0,002

Supplier X

0,030

Supplier Y

0,012

Supplier Z

0,009

The next step that can be taken is adding up the weight of each alternative as a whole in the
global priority of each supplier. The following table is the result of the calculation for eachalternative and Figure 3 of the calculation results using expert choice

Figure 3. Synthesis Priority Supplier
From figure 3 shows that supplier X has the highest weight, namely 0.479 as the first priority
to be selected as a supplier of raw material for aluminum scrap CV Sumber Logam. The
second priority is supplier Y with a weight of 0.291, then the last priority is supplier Z with aweight of 0.230.
Based on table 4 there are alternative weight of supplier in every criteria. The following
figure is a hierarchical structure in selecting in the best supplier.

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Figure 4. Structure Hierarchy Priority Weight CV Sumber Logam
This shows that supplier X can be used as an alternative supplier of raw materials that can beselected as a supplier partner and table 4 is the result of supplier weight in each criterion :Table 5. Alternative Weight (Supplier) Based on Criteria
Criteria
Cost
Quality
Warranty & Complaints Service
Delivery
Perfomance History

Supplier
X
0,500
0,465
0,384
0,426
0,540

Supplier
Y
0,224
0,280
0,464
0,414
0,280

Supplier
Z
0,276
0,255
0,152
0,160
0,180

The results of table 5 are that supplier X is superior in several criteria, namely price criteriawith a weight of 0.500, quality criteria with a weight of 0.465, delivery criteria with a weightof 0.455 and criteria for performance history with a weight of 0.464. In the price criteria
supplier X ranks first with a weight of 0.500, then supplier Z with a weight of 0.276 andfinally supplier Y with a weight of 0.224. Furthermore, the quality criteria, supplier X withthe first order with a weight of 0.465, the second order is supplier Y with a weight of 0.280
and the last is occupied by supplier Z. Criteria for warranty and service complaints, the firstorder with the largest weight is occupied by supplier Y with a weight of 0.464, then second
with supplier Y with a weight of 0.464. with a weight of 0.384, namely supplier X, finally
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supplier Z with a weight of 0.169. The last criterion is performance history, the firstalternative that has the largest weight is supplier X with a weight of 0.540, the second order is
supplier Y with a weight of 0.280 and the last is supplier Z with a weight of 0.180.
Consistency measurement. This measurement is to see the assessment given by the
respondent. If CR <0.1 or less than 10%, then the pairwise comparison value on the given
criteria matrix is consistent, on the other hand, if CR> 0.1 or more than 10%, there is no
consistency.
Table 6. Consistency Ratio Respondent Assessment
Pairwise Comparison

CR

Information

Criteria (level 1)

0,04

Consistent

Cost subcriteria

0,02Consistent

Quality subcriteria

0,00Consistent

Warranty and complaint service subcriteria

0,04

Consistent

Delivery subcriteria

0,04

Consistent

Performance history subcriteria

0,00Consistent

Alternatives to the H1 subcriteria

0,00Consistent

Alternatives to the H2 subcriteria

0,00Consistent

Alternatives to the H3 subcriteria

0,00Consistent

Alternatives to the Q1 subcriteria

0,00Consistent

Alternatives to the Q2 subcriteria

0,00Consistent

Alternatives to the W1 subcriteria

0,00Consistent

Alternatives to the W2 subcriteria

0,00Consistent

Alternatives to the W3 subcriteria

0,00Consistent

Alternatives to the W4 subcriteria

0,00Consistent

Alternatives to the D1 subcriteria

0,00Consistent

Alternatives to the D2 subcriteria

0,00Consistent

Alternatives to the D3 subcriteria

0,00Consistent

Alternatives to the P1 subcriteria

0,00Consistent

Alternatives to the P2 subcriteria

0,00Consistent

The value of table 6 shows that all ratings given by respondents are consistent because thevalue is not more than 10% or CR> 0.1. Then the calculation results do not need to berepeated.

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CONCLUSSIONAND RECOMMENDATIONThe results of the data analysis show that there are 5 criteria, the order of criteria that
influence the selection of raw materials for aluminum scrap at CV Sumber Logam, namely
the criteria for quality, price, delivery, warranty and service complaints, performance history.
In the global priority sub-criteria sequentially according to priority, namely the suitability ofgoods with the desired specifications (0.33), the suitability of raw material prices (0.19), theability to provide consistent quality (0.11), the ability to give a certain quantity ordering
discount (0.07), the ability to deliver goods according to the agreed date (0.06), the ability tomaintain the contract agreement and the accuracy of the number of shipments (0.05), theability to provide raw material shipping costs (0.04), responsiveness to resolve customer
complaints (0 , 03), speed of responding to complaints (0.02), ease of claim processing,guarantee of goods on time, ability to maintain contract agreements have the same weight(0.01). Based on the overall calculation using AHP, supplier with the highest weight, thensupplier Y, supplier Z.
Recommendation that can be given are that companies in the future in analyzing suppliers
can use AHP analysis calculations to make decisions because if there are new criteria or subcriteria that are relevant to the company or in accordance with new company policies, thecompany can change the criteria and sub-criteria, currently used. It consists of the conclusion,clarity of new findings, new theories and the possibility of future research development.

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