The problem of decision making in the real-life situations that are complex is difficult because it requires simultaneous consideration of the alternatives with various benefits and drawbacks so as to determine the most appropriate choice. The main aim of the research is to critically compare three options based on various criteria of varying levels of significance, in regard to essential parts and components used in the pile-driving machines in a strategic procurement process. In this context, the decision problem was hierarchically organized, and the Analytic Hierarchy Process (AHP) was used in order to estimate relative importance weights of the criteria. These weights were used to evaluate the alternatives of each machine part and rank them. The results of the analysis indicate that there are considerable differences between the options and that some of the criteria have a more decisive impact on product-related choices. Moreover, a mathematical optimization model was developed by integrating the priority scores as calculated by the AHP into the objective function, thus arriving at the best decision within the constraints of operational capacity. This strategy provides a deliberate, clear, and realistic decision support system that strikes a balance between cost and strategy and resource constraints.

Keywords

Make-or-Buy Decision, Analytic Hierarchy Process (AHP), Multi-Criteria Decision Making, Mathematical Optimization and Capacity Constraints.