Decision Support Model for Subcontractor Selection in Defense Industry Projects with Analytic Hierarchy Process and Integer Linear Programming

Abstract

This study aims to model the problem of subcontractor selection in defense industry by using Analytic Hierarchy Process (AHP) and Integer Linear Programming (ILP) with respect to criteria relative to defense industry. The problem of subcontractor selection is a complex decision-making problem that requires a number of criteria to be analyzed. Criteria to be taken into consideration in Multiple Criteria Decision Making (MCDM) analysis vary depending on the sector and project. In the decision support model developed in this study, a set of 27 criteria has been formed in the light of literature review and expert opinions. Defense industry projects can be evaluated as multiple subprojects due to their size. The sub fractions of these parts can also be extended to lower levels in accordance with the project structure. Subcontractor selections should be defined separately for multiple parts, taking into account the characteristics of each part. A wide set of criteria has been defined to provide input for AHP by choosing considerable criteria for each project subpart according to characteristics of the project subparts for subcontractor selection in defense industry projects. A project carried out at a defense industry company in Turkey has been used as a case study project. The project has been divided into six project subparts under three main parts, and four alternative subcontractor companies are determined as candidate subcontractors. AHP has been applied to the relevant criteria and alternative subcontractors for each subpart of the project to find the priority weights of candidate subcontractors. In this way, instead of assigning certain parts of a project to a single subcontractor, a weighting is obtained to find the most suitable subcontractors for each subpart considering its characteristics. Afterwards, ILP has been used to include the constraints regarding the project specifications in the evaluation process of subcontractor selection problem. An optimization model is built with the aim to evaluate AHP weights together with the set of constraints. The combination of AHP and ILP is intended to be turned into a model that simplifies the complex process of subcontractor selection and presents the optimal solution for decision makers. The lessons learned and results about the use of these methods in subcontractor selection have been explained together with the discussions about the results of the case study in the conclusion part.