Applying ANP for raw material supply in Iranian paper industry
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The OR Society OR Insight Vol. 21 Issue 3
Applying ANP for raw material supply in Iranian paper industry Majid Azizi Natural Resources Faculty, University of Tehran mazizi@ ut.ac.ir Moharnrnad Modarres Department of Industrial Engineering, Sharif University of Technology modarres@shari£edu
Keywords: Analytic Hierarchy Process, Analytic Network Process, BOCR, paper industry
success factor, and there is a serious deficiency in the industry concerning the lack of proper planning of raw material supply.
Abstract The aim of this paper is to develop a strategic plan for selecting the best options for the supply of raw material to feed paper producing plants. The decision-making is examined within the framework of benefits, opportunities, costs, and risks (BOCR). A hierarchy is used to prioritize the BOCR, using the Analytic Hierarchy Process (AHP) ratings approach. A control hierarchy is then created and prioritized using the Analytic Network Process (ANP) to evaluate the "control criteria" of the system. There are a total of nineteen control criteria in the system and each controls a decision network evaluated using the ANP. The final synthesis of the system shows external procurement is the best choice.
In this paper, we apply AHP (Saaty, 1999) and ANP (Saaty, 2001a) as the tools for selecting the best choice in the field of raw material supply for paper producing plants in Iran. The main objective is to develop guidelines for strategic planning, based on the appropriate decisions made by adopting this approach. Development of reliable and stable suppliers needs long range planning; it is not wise to consider only short term planning which is mostly established on the basis of price and availability. In long range or strategic planning we need to consider various criteria influencing the decision. There are several alternatives for supply of raw material to paper manufacturers, including use of external resources, internal resources and a combination of both. Domestic raw materials for paper manufacturing come from different sources: forest resources; non forest resources such as poplar trees; bagasse (agricultural wastes) and waste paper. Some raw materials, such as poplar, birch trees, softwood species and long fiber pulp, are also imported from foreign sources, although at the moment importation is not significant.
Introduction There is a tremendous demand for various types of paper in Iran, and Iranian plants cannot produce sufficient output to satisfy this demand. The most important obstacle that domestic paper manufacturers are facing is inadequate raw material supply. As the research by Azizi et al. (2003) shows, the supply of raw material for wood and paper industries is a very important 3
Currently managers make only operational or short-term decisions. Essentially, they purchase raw materials which are available in the market, leaving them unable, in many cases, to procure enough raw material to meet production goals, particularly in the longer term.
By way of background, Table 1 shows the situation
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