An Application of Multi-Criteria Decision-Making Model to Strategic Outsourcing for Effective Supply-Chain Linkages

Multi-Criteria Decision Making

Multi-criteria decision making (especially integrated MCDM) is defined as an applied linear programming model for a decision process that allows the decision-maker to evaluate various competing alternatives to achieve certain goals. Relative importance is assigned to the goal with respect to a set of chosen criteria. MCDM is appropriate for situations in which the decision-maker needs to consider multiple criteria in arriving at the best overall decisions. In MCDM, a decision-makers select the best strategy among a number of alternatives that they evaluate on the basis of two or more criteria. The alternatives can involve risks and uncertainties; they may require sequential actions at different times; and a set of alternatives might be either finite or infinite. A decision-maker acts to maximize a value or utility function that depends on the chosen criteria. Since MCDM assumes that a decision-maker is to select among a set of alternatives, its objective function values are known with certainty. Many MCDM problems are formulated as multiple objective linear, integer, nonlinear, and/or interactive mathematical programming problems.