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Web-based Three-step of
Decision Approach for Logistics Project and Make-or-Buy Decision 3. SW for Logistics Project Management
2007. 7. 9.
韓國, 東明大學校, 港灣物流學部 Prof. Heung Suk Hwang(黃 興 錫) e-mail: firstname.lastname@example.org Tel: +82-51-620-3486
1. Introduction 2. Properties of Make-or-Buy Decision Problem 3. Web-based Three-step Approach of Decision Alternative Analysis, 4. Model Application to Cellular Manufacturing System 5. Resource Allocation in Logistics System 6. Summary and Conclusions
Schematic Diagram of 3-step Algorithm
3 -Step 단계 3Algorithm for 통 Optimal 선 3-step Algorithm for 한 솔류션 정 Solution 알고리즘 Optimal Solution 적용을 최적
Brainstorming AHP, Fuzzy-AHP Aggregate Priorities
Schematic Diagram of 3-step Algorithm
Text Book Published:
Web-based Decision Support System Group-Joint Work
Web-based Integrated Web-based Integrated Decision Support System Decision Support System
Web-based Integrated Decision Support System
Step 1 : Individual Evaluation of Alternatives 1) Brainstorming to Generate Alternatives and to Define the Performance Factors 2) Evaluation of Alternatives Using AHP and Fuzzy AHP methodologies Step 2 : Integrate the Individual Analysis - Heuristic Model 1, 2 - Fuzzy Set Priority Method Step 3 : Application, Resource Allocation Model - LP formulation using AHP weighted value - Developed Computer Program
- Web-based Internet/Intranet Solution Builder - GUI-type Program - Integrated decision support system
Figure 2 . Three-step Approach of the Evaluation Model
2. Properties of Make-or-Buy Decision Problem ☞ Properties and issues responsible for differentiating one
type of make-or-buy decision problem . - What backgrounds trigger a make-or-buy decision problem? - What factors could be considered in make-or-buy decision problem ? - Along which dimensions should make-or-buy decision problem be categorized ?
Table 1. Major factors Influencing make-or-buy decision problem (by literatures)
Performance Measure Criteria • Cost • Quality • Delivery speed • Delivery reliability • Volume flexibility • Product flexibility Examples of measurement Parameters - Total unit cost - Internal failure cost-scrap, rework, rejected - Delivery lead time - Percentage of on-time delivery - Average volume fluctuation - Number of component substitutions made over a given time period.
Make Full Ownership Partial Ownership Retainer Short Term Contract Spot Market Buy
Figure 3. Range of Source Structure of make-or-buy decision problem
Table 2. Example of performance Evaluation of make-or-buy decision problem
Manufacturing Technology Out Source Risk
- Importance of technology for competitive advantage - Maturity of technology - Technology uncertainty - Probability of future improvements - Appropriation risk - Technology diffusion - End-product degradation - Benchmarking - Workforce stability - Complexity level in planning, control, or supervision - Assurance and reliability of supply - Benchmarking - Cost - Investment - Return on investment - Manufacturing capability - Quality - lead time - Volume uncertainty
Managerial Issues Financial Issues Operational Issues
3. Web-based Three-step Approach of Decision Alternative Analysis
Step 1 :: Brainstorming Model Stochastic Set 단계 1 - Generate Alternatives and ? 적정보급센터의 소요 - Define the Performance Factors 보급센터의 위치결정 - Relationship Between Factors 적정 보급지원수준 결정 Step 2 :: AHP,Analytic Hierarchy Process 단계 2 SecterClustering Model - Construction Evaluation Structure - Evaluation of Alternatives Using AHP 보급지원 영역활당 and Fuzzy AHP methodologies Zone-Based
-- Visual Program 시각화
• GYI-Type GUI-Type ? SW Developed • 프로그램개발 프로그램개발 ? Customer • 사용자위주의 사용자 위주의 Responsive 프로그램개발 프로그램개발
Web-based -- Web 기반의 통합화 Network Netork
• System System System System • Flexibility 확장성 확장성, • Usability 활용성 활용성
Step 3 :: Aggregating Model 3 GA-VRP Model -Evaluation of Alternatives Using AHP - 개별 and Fuzzy set ranking methodologies - 종합우선순위산출 - PrioritizeMode 선정 Sets 운송 the Prioritized 의 Fig 3. Web-based Integrated Decision Model
☞ Construct decision structure and Derive out the evaluation alternatives - the group decision ideas, the creative ideas ☞ we used a brainstorming method and developed a GUI-type program ☞ To create the ideas of project evaluation alternatives and methods for decision support system analysis, ☞ we construct decision structure using the brainstorming file in the internet/intranet–based environment
3.2 Fuzzy -AHP Method
☞ The concepts and rules of fuzzy decision making provide us with the necessary tools for structuring a decision from a kind of information. ☞ From the Shannon's summed frequency matrix for complementary cells,
☞ an additional fuzzy set matrix was made by considering A ij = 1 – Aji for all cells. The fuzzy matrix complement cell values sum to 1 and fuzzy set difference matrix is defined as follows : R - RT = U(A, B)-U(B, A), if U(A, B) > U(B, A), = 0 otherwise where, for U(A, B) quantifies, A is preferable to B.
Five Steps Fuzzy AHP :
To obtain fuzzy preferences, the following five steps were considered:
Step 1 : Find the summed frequency matrix ( using Shannon method ) Step 2 : Find the fuzzy set matrix R which is the summed frequency matrix divided by the total number of evaluators Step 3 : Find the difference matrix R - RT = U(A, B)-U(B, A), if U(A, B) > U(B, A), X = 0 otherwise where, for U(A, B) quantifies, A is preferable to B.
Step 4 : Determine the portion of each project that is not dominated as follows : ND , ) X X AColA = 1 - max(1.ColA X 2.ColA , … n,.ColA Step 5 : The priority of the fuzzy set is then the rank order of XND values with a decreasing order.
An example is shown as follows :
⎡ 0 .0 ⎢ 0 .2 R= ⎢ ⎢ 0 .4 ⎢ 0 .4 ⎣ ⎡ 0 .0 RT = ⎢ 0 . 8 ⎢ 0 .6 ⎢ ⎢ 0 .6 ⎣
0 .0 ⎤ 0 .4 ⎥ ⎥ 0 .4
0 .0 0 .0 0 .1 0 .0
⎥ 0 .6 0 .6 0 .0 ⎥ ⎦ 0 .2 0 .4 0 .4 ⎤ 0 .0 0 .1 0 .6 ⎥ ⎥ 0 .0 0 .0 0 .6 ⎥ 0 .4 0 .4 0 .0 ⎥ ⎦
0.6 0.2 0.2 ⎤ 0.0 0.0 0.0 ⎥ 0.1 0.0 0.0 ⎥ 0.2 0.2 0.0 ⎥ ⎦
⎡0.0 ⎢0.0 T R−R =⎢ ⎢0.0 ⎢0.0 ⎣
= 1 - Max(0.0) = 1 - 0.0 = 1.0 = 1 - Max(1.0) = 1 - 1.0 = 0.0 = 1 - Max(0.2) = 1 - 0.2 = 0.8 = 1 - Max(0.2) = 1 - 0.2 = 0.8
The fuzzy set priority score : 1.0 > 0.0 > 0.8 > 0.8 and the alternative priority : A > C > D > B.
3.3 Integration of Individual Evaluation
For the integration of the results of individual evaluations, prioritized sets, we used two Heuristic models 1, Model 2 and Fuzzy set priority method
1) Heuristic Model 1 :
- For example of the Heuristic Method 1, a sample result with - N = 5 evaluators and M = 3 alternatives is given as : Evaluator 1 : B > A > C, Evaluator 2 : B > C > A, Evaluator 3 : C > A > B, Evaluator 4 : C > B > A, Evaluator 5 : C > B > A
Heuristic Method 1 rank order is given by C(0.467) > B(0.400) > A(0.133).
2) Heuristic Model 2 :
- The evaluator frequency matrices were added to form a summed frequency matrix - Then, the preference matrix was developed by a comparison of the scores in the component cells(A, B versus B, A). - If the A, B value equals B, A, then each component cell in the matrix is given by 1/2. On the other hand if the A, B value is greater than the B, A , then A, B is given by one and B, A cell of the preference matrix is given by 0.
By applying the Heuristic Model 2 to the same example of Heuristic Method 1, the result is given by C(0.450) > A(0.392) > B(0.158) .
3) Fuzzy Set Priority Method
. The fuzzy matrix complement cell values sum to 1 and fuzzy set difference matrix is defined as follows : R-RT = U(A, B) - (B, A), if U(A, B) > U(B, A), = 0, otherwise
To obtain fuzzy preferences, following five steps are considered : Step 1 : Find the summed frequency matrix (using heuristic method 2) Step 2 : Find the fuzzy set matrix R which is the summed frequency matrix divided by the total number of evaluators Step 3 : Find the difference matrix R - RT = U(A, B) - U(B, A), if U(A, B) > U(B, A), = 0, otherwise where, for U(A, B) quantifies, A is preferable to B. Step 4 : Determine the portion of each part Step 5 : The priority of the fuzzy set is then the rank order of values in decreasing.
The sample problem result by fuzzy set priority method is given by C(0.492) > B(0.387) > A(0.121).
3.4 In ternet /intranet Based Solution Builder for Decision Support System
Developed a solution builder using GUI-type Simulation Software.
☞ Three steps of this solution builder.
3-step Algorithm for Optimal Solution
Brainstorming AHP, Fuzzy--AHP Aggregate Priorities
Figure 2. 3-step approach of Decision Support System
4. Application Make-or-Buy Decision Analysis in Logistics System ☞ Applied to Special decision problems; multi-objective, multi-criterion, and multi-attributes structures for Cellular manufacturing system 1) Make-or-buy decision making, 2) Determine the weighted value of each decision factors, 3) Resource allocation in manufacturing process,
4.1 Cellular Manufacturing System ☞ Generally, the cellular manufacturing system uses many kinds of machines and tools ☞ manufacturing process is a little bit complicated than conventional production system ☞ In this study we used an oil pan manufacturing cell ☞ produces oil pan by 120 lot size, two workers, and CNC machine: - milling machine, - boring machine, - multi-spindle and drilling, ☞ CNC cell produces oil pan by 120 lot sizes.
☞ Sample Example :
Oil pan manufacturing cell layout CNC Drilling, Multi-spindle, And tapping Machine
Governer Assembly Area
CNC Boring Machine
Finished Oil pans
Casting (Raw Material)
CNC Milling, Machine
Figure 5. Sample output of AHP Structure (Oil Pan Manufacturing Cell)
Figure 6. Sample Output of AHP structure of Cellular manufacturing System
(Final Object) 0.74
A1 Final Object
(Acq. Method) B1
in house B2
P1 Proj. 1
B1 B2 B2 0.19 0.39 0.58
P2 Proj. 2
0.29 0.32 0.16
P3 Proj. 3
0.21 0.21 0.15
P4 Proj. 4
0.29 0.06 0.07
P5 Proj. 5
0.02 0.04 0.04
Integration of Individual Evaluations :
Using the Heuristic 1, Heuristic 2, AHP, and Fuzzy Set Ranking methods, we integrated the results of the individual reviewers as following, where, B1: make in house not outsourcing, B2: partial make in house and partial out sourcing for technology, B3: all outsourcing, P1, ···, P5 : cellular manufacturing alternatives Table 4. Results of Integrated Priority Majority Rule used Priority by Alternative
Methods 1. Heuristic Model 1 2. Heuristic model 2 3. Fuzzy Set Ranking Method Priority by B1 (0.70), P1 (0.29), (0.08) B1 (0.73), Alternatives B2 (0.18), B3 (0.12) P2 (0.30), P3 (0.18), P4 (0.15), P5
B2 (0.23), B3 (0.05) P1 (0.36), P2 (0.27), P3 (0.13), P4 (0.15), P5 (0.09) B1 (0.74), B2 (0.20), B3 (0.06) P1 (0.38), P2 (0.26), P3 (0.19), P4 (0.12), P5 (0.05)
5. Resource Allocation in Logistics System
☞ Using the AHP weighted value in resource allocation of
manufacturing works for Cellular manufacturing system
☞ For the budget allocation problem for this cellular
manufacturing works (alternatives) using the weighted values of level 2, we formulated as following optimization problem.
W ij X
Max Z = 0.19X11 + 0.29X12 + 0.21X13 + 0.29X14 + 0.02X15 + 0.39X21 + 0.32X22 + 0.21X23 + 0.06X24 + 0.04X25 + 0.58X31 + 0.16X32 + 0.15X33 + 0.07X34 + 0.04X35 s.t. 11000X11 + 9000X12 + 12000X13 + 8000X14 + 7000X15 ≤ 25000
4000X21 + 5000X22 + 6000X23 + 5000X24 + 3000X25 ≤ 18000 4000X31 + 3000X32 + 5000X33 + 2000X34 + 1000X35 ≤ 11000 where, Xij = 0, 1 ∀i, j
6. Summary and Conclusion ☞
Web-based three-step approach of web-based make-or-buy decision model for multi-structured decision support system: 1) Brainstorming to define the alternatives and performance evaluation factors, 2) Individual evaluation of the alternatives using fuzzy-AHP, heuristic and fuzzy set reasoning methods, and 3) Integration of the individual evaluations using majority rule method. ☞ Developed a systematic and practical program ☞ The model was applied to a cellular manufacturing system problem for the purpose of comparative validation. ☞ The results of various multi-structured decision support examples for make-or-buy decision analysis and also resource allocation problems are shown ☞ By the sample results, the proposed model is a good method for the performance evaluation of multi-attribute and multiple goals for make-or-buy decision problems.
Prof. Heung Suk Hwang (黃 興錫)
韓國, 東明大學校, 港灣物流學部
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