Introduction:

Through this Supply Chain Modelling and Empirical Analysis project, we aim to select the best
warehouse for which we have adopted Analytical Hierarchy Process (AHP). Calculations have
been attached and various factors influencing the decision-making process have been identified.
We want to express our gratitude to Professor Srikanta Routroy, the Head of the Mechanical
Department, for providing us with this chance and imparting the necessary knowledge and
techniques. The completion of this assignment is a collaborative effort by our team including:

● Denver Lobo              (2020ABPS1849P)

● Anubhav Jindal           (2020A4PS1077P)
● Priyanshu Goel            (2020A4PS0230P)
● Keshav Bansal            (2020ABPS0489P)
● Mayan Agrawal (2020A4PS1863P)
● Shereen Gauba           (2020ABPS1845P)

Problem Statement:

Warehouse selection is a critical decision for businesses that rely on efficient supply chain
management. The right warehouse can significantly impact a company's ability to meet customer
demands, reduce operational costs, and improve overall performance. Choosing a warehouse that
is strategically located can help reduce transportation costs, shorten lead times, and improve
overall supply chain efficiency. Additionally, the size and layout of a warehouse can impact the
speed and accuracy of order fulfillment. 
By means of this task, our aim is to facilitate the resolution of this issue for manufacturing firms
who use our analysis as a foundation for their decision-making, making the process easier.

Factors Influencing Warehouse Selection:

1. Location: The location of a warehouse plays a critical role in supply chain efficiency.
The warehouse should be located in an area that is easily accessible and well-connected
to the transportation network. Amazon's selection of warehouse locations is often
strategically based on proximity to large population centers and transportation
infrastructure. For example, Amazon built an 855,000 square-foot warehouse in the city
of Fall River, Massachusetts, due to its access to the I-195 highway, Fall River Line Pier,
and the Taunton River.

2. Cost: The cost of operating a warehouse is an important consideration. This includes

factors such as rent, utilities, labor, and equipment. In 2020, Walmart opened a high-tech
distribution center in Shafter, California that utilizes automation and robotics to reduce
labor costs. The facility also features energy-efficient lighting and cooling systems to
minimize utility costs.
3. Capacity: The size and capacity of the warehouse should match the needs of the
business. The warehouse should be able to accommodate current inventory levels and
future growth. The beverage company Coca-Cola built a 1.5 million-square-foot
distribution center in South Carolina to accommodate its growing business needs. The
facility has the capacity to store over 2 million cases of product and can process up to
150,000 orders per day.

4. Safety: Safety is a crucial consideration in warehouse selection. The facility should be

designed to minimize the risk of accidents and injuries to workers and visitors. The
furniture company IKEA built a warehouse in Maryland that features an automated safety
system to protect workers. The system uses laser sensors to detect obstacles and prevent
moving equipment accidents.

5. Environmental Impact: The environmental impact of the warehouse operation should

be considered. This includes factors such as energy efficiency, waste management, and
emissions. The logistics company UPS operates an eco-friendly warehouse in New Jersey
that uses solar power and rainwater harvesting to reduce energy and water consumption.
The facility also features electric forklifts and charging stations for electric delivery
trucks.

6. Technology: The use of technology can greatly improve the efficiency of warehouse
operations. Factors such as warehouse management systems, automation, and robotics
should be considered. The apparel company Nike built a high-tech warehouse in Belgium
that features automated storage and retrieval systems, robots, and conveyor belts to speed
up order fulfillment and reduce labor costs.

7. Accessibility: The warehouse should be easily accessible to customers, suppliers, and

other stakeholders. This includes factors such as proximity to major highways and public
transportation. The electronics retailer Best Buy operates a warehouse in Georgia that is
strategically located near major highways and rail lines for efficient transportation and
distribution of products.

8. Security: The security of the warehouse is an important consideration to protect the

inventory and assets stored in the facility. The pharmaceutical company Pfizer uses a
network of secure warehouses and distribution centers to protect its products from theft
and counterfeiting. The facilities use advanced security systems such as biometric access
controls and GPS tracking.
Input Matrices and Calculations
Given below are six different data analyses of the VIKOR and AHP investigation to select
the most appropriate location warehouse of a multinational FMCG company. Here each different
analysis is done by six different experts based on their understanding of the various factors that
are taken into account.

The Analytic Hierarchy Process (AHP) is a decision-making framework that helps in solving
complex problems by breaking them down into smaller, more manageable parts. The process is
based on a mathematical model that uses pairwise comparisons to evaluate the importance of
various criteria and alternatives. AHP can be used in a wide range of fields, from business to
engineering to healthcare, to facilitate decision-making.

The AHP decision-making process begins by defining the problem and the criteria that need to
be considered. The criteria are the factors that will be used to evaluate the alternatives. For
example, since here we’re deciding on how a company would decide their warehouse the criteria
would include location, safety, cost, environmental impact, capacity, etc.

Once the criteria have been identified, the next step is to determine the relative importance of
each criterion. This is done through pairwise comparisons, where each criterion is compared to
every other criterion. For example, you might compare the location to the cost and determine
that price is twice as important as the location. This process is repeated for each pair of criteria
until a complete ranking is established. After the criteria have been ranked, the next step is to
evaluate each alternative against the criteria. This is done through another set of pairwise
comparisons, where each alternative is compared to every other alternative. For example, if you
are trying to decide between three cars, you would compare Car A to Car B, Car A to Car C, and
Car B to Car C. This process is repeated until a complete ranking of the alternatives is
established.

The final step is to calculate the overall priority of each alternative based on its ranking and the
importance of each criterion. This is done by multiplying the rank of each alternative in each
criterion by the importance of that criterion and summing the results. The alternative with the
highest priority is then selected as the best option.

The Analytic Hierarchy Process (AHP) is a system that combines math and psychology to
organize and analyze complicated decisions. It can help to reduce bias and improve the quality of
decisions, particularly in complex and uncertain situations. This analysis is solely done from the
expert’s point of view and may vary from expert to expert.
Vikor (VlseKriterijumska Optimizacija I Kompromisno Resenje) is a multi-criteria
decision-making method that helps in selecting the best alternative from a set of alternatives
based on a set of criteria. Identify the alternatives and criteria to be evaluated. The first step in
the Vikor method is to identify the set of alternatives and criteria that need to be evaluated. For
example, if you are trying to select a supplier for a product, the alternatives could be different
suppliers, and the criteria could be factors such as location, cost, capacity, environmental impact
etc.

The next step is to normalize the data for each criterion. This involves transforming the raw data
into a common scale so that each criterion can be compared on an equal basis. The normalization
process typically involves dividing each data point by the maximum value for that criterion.
The weights of the criteria represent their relative importance in the decision-making process.
The weights can be determined through various methods such as expert judgment, surveys, or
analytical methods such as the AHP (Analytic Hierarchy Process). The decision matrix is a
matrix that represents the alternatives and criteria along with their corresponding values. This
matrix is used to calculate the compromise ranking of the alternatives.The Vikor scores are
calculated by first determining the best and worst values for each criterion. The best value
represents the ideal value for that criterion, while the worst value represents the least favorable
value. The Vikor score for each alternative is then calculated as the sum of the weighted distance
from the best value and the weighted distance from the worst value.

The compromise ranking is determined based on the Vikor scores of each alternative. The
alternative with the lowest Vikor score is selected as the best compromise solution.
Overall, the Vikor method provides a systematic and objective approach to multi-criteria
decision-making. It allows decision-makers to consider multiple criteria and their relative
importance in a structured manner, leading to more informed and effective decisions. The
VIKOR analysis is done here by ranking each warehouse location with respect to the factors that
have been taken into account.

● Denver Lobo
● Anubhav Jindal

● Priyanshu Goel
● Keshav Bansal

● Mayan Agarwal
● Shereen Gauba
Final Table AHP and VIKOR

After collecting data from the six different AHP data tables, we needed to compile this data into
a final table. To accomplish this, we used the Geometric Mean method, which is a mathematical
formula that allows us to calculate the central tendency of the data. The Geometric Mean is
calculated by multiplying all the data values and then taking the nth root of the result, where n is
the total number of data points. This approach ensured that all the data values were given equal
weightage in the final analysis.
Similarly, for the VIKOR method, we took the Arithmetic Mean of each data value. This method
is the most common way of calculating the mean in statistical analysis, and it provides us with a
simple and efficient way to analyze the data. By taking the average value of each data point, we
were able to get a clear idea of the overall ranking of each factor for each warehouse, which
helped us to make a more informed decision.
All of these calculations were done using basic Microsoft Excel tools, which made it easy for us
to organize and analyze the data quickly and efficiently. We used a range of functions, including
the "AVERAGE" function for calculating the mean, and the "GEOMEAN" function for the
Geometric Mean calculation.
Overall, by using these statistical methods and tools, we were able to streamline the data analysis
process and arrive at a conclusive decision regarding the best warehouse option. The use of these
mathematical methods not only helped us to organize the data but also provided us with a solid
foundation for our decision-making process. The end result is a well-informed decision that will
help us achieve success for the company.
Conclusion

After conducting a thorough analysis using the Analytical Hierarchy Process (AHP) and VIKOR
method, we are now able to make a well-informed and statistically sound decision regarding the
selection of the best warehouse out of the five shortlisted options.
To conduct the AHP analysis, we used six different data tables, with each member of the team
creating their own table based on the factors they considered important while selecting these
warehouses. We then combined these tables to form a final AHP Table, which showed the
relationship between the various factors that we considered during the selection process. This
qualitative analysis allowed us to take into account the industry and utilization of the company,
which helped us in understanding the different factors and their importance.
For the VIKOR analysis, we also used six different data tables, with each team member ranking
the different factors for each warehouse individually. These tables were then combined to form a
final VIKOR Table, which helped us to get an average ranking for each factor for each of the
shortlisted warehouses. This quantitative analysis was a significant help in making an informed
decision based on statistical data.
Based on the final data obtained from both the AHP and VIKOR analyses, it appears that the
warehouse located in Bedford, PA, may be the most suitable option. However, it's important
to note that while these analyses provide a solid foundation for decision-making, other factors
such as cost, location, and availability of labor must also be considered before making a final
decision.
In conclusion, the AHP and VIKOR methods have allowed us to make a well-informed and
statistically sound decision regarding the selection of the best warehouse from the given options.
By considering both qualitative and quantitative analyses, we were able to make a more holistic
and informed decision.
In addition to the aforementioned analysis, it is important to note that the decision-making
process should also involve considering other external factors such as market trends, industry
regulations, and economic conditions. These factors can have a significant impact on the
long-term success of the chosen warehouse.
Furthermore, it is imperative to have open communication and collaboration between team
members during the decision-making process. This will help ensure that everyone's opinions and
insights are considered, and that the ultimate decision is made with the best interest of the
company in mind.
Overall, by utilizing the AHP and VIKOR methods, we have gained a comprehensive
understanding of the different factors involved in selecting the best warehouse. This has allowed
us to make an informed decision based on statistical data, and we are confident that our choice
will ultimately lead to success for the company.