Application of multi-attribute utility theory in selection of raw material suppliers

Abstract

This paper discusses the problem of choosing the suppliers of raw materials in real conditions. This problem is very important in many industries. With the purpose of reviewing this problem more objectively, the paper suggests that the selection of suppliers of raw materials should be done by using utility theory, more precisely, by using the Multi-Attribute method of usefulness with the additive forms. Based on the given example of selecting the suppliers of raw materials, using the aforementioned methods, the conclusion is that utility theory and multicriteria analysis can be successfully applied in solving the problem of choosing the suppliers of raw materials. Depending on specific conditions, it is possible to change the criteria and their importance. Also, it is possible to apply other methods of multicriteria analysis in the problem of choosing the suppliers of raw materials.