1. Objective
The Analytic Hierarchy Process (AHP) is often used in decision-making scenarios where multiple criteria must be evaluated to choose the best alternative. For an inventory management project, here are 7 potential criteria and 4 Alternatives you can use.
2. Determining the model, criteria and alternative
In this step, the model, criteria and alternatives are determined:
Criteria:
1. Cost – The price of the inventory item.
2. Demand Forecast Accuracy – The accuracy in predicting how much of the item will be needed.
3. Lead Time – The time it takes for the inventory to be replenished.
4. Storage Space – The amount of space the inventory occupies.
5. Supplier Reliability – The reliability of the supplier in delivering the items on time and without defects.
6. Quality – The quality level of the item in stock.
7. Carrying Costs – The costs associated with storing the inventory, such as warehousing and insurance.
Alternatives:
1. Product A – A high-demand product.
2. Product B – A perishable product with a short shelf life.
3. Product C – A slow-moving but high-margin product.
4. Product D – A low-cost bulk item
3. Pairwise comparison table
After determining the criteria and alternatives, the Pairwise comparison table matrix is formed. In the paired comparison table, the parameters (criteria or alternatives) are compared in pairs .The table below shows the pairwise comparison tables:
