ERP system selection using a simulation-based AHP approach: a case of Korean homeshopping company

• Published in: The Journal of the Operational Research Society Vol. 59; no. 3; pp. 322 - 330
• Main Authors: Ahn, B S, Choi, S H
• Format: Journal Article
• Language: English
• Published: London Taylor & Francis 01.03.2008; Palgrave Macmillan Publishers; Palgrave Macmillan UK; Palgrave; Taylor & Francis Ltd
• Subjects: Aggregation; analytic hierarchy process; Applied sciences; Business and Management; Business structures; Case-Oriented Paper; Corporate planning; Decision making; Decision theory. Utility theory; Electronic commerce; Enterprise resource planning; Exact sciences and technology; Firm modelling; Flexibility; Frequency distribution; group decision making; Hierarchies; Information systems; Information technology; Judgment; Management; Manufacturing; Marketing; Operational research and scientific management; Operational research. Management science; Operations research; Operations Research/Decision Theory; Professional certification; Simulation; Studies; Total costs; Vendors; Korea; analytic hierarchy process; group decision making; enterprise resource planning; information systems; simulation; Critical system; Decision support system; Information system; Multicriteria analysis; Decision making; Competitiveness; Analytic hierarchy process; Process selection; Individual preference; Diversification; Integrated management; Consensus; Aggregation; Social decision; Reactive system; Feasibility; Firm management; Resource management; Investment; Judgment
• ISSN: 0160-5682; 1476-9360
• DOI: 10.1057/palgrave.jors.2602365

An enterprise resource planning (ERP) system is a critical investment that can significantly affect future competitiveness and performance of a company. The analytic hierarchy process (AHP) method is often applied to select an ERP system since it is well suited to multiple criteria decision-making problems. This study presents a simulation-based AHP (SiAHP) method for group decision making and is applied to the real-world problem of selecting a suitable ERP system for a Korean homeshopping company. To enhance the fitness of a group AHP method and to facilitate the ERP system selection process, this paper proposes a simulation-based approach for building a group consensus instead of forming point estimates that are aggregated from individual preference judgments. To be specific, the proposed method is based on observations from empirically observed frequency distributions and does not use aggregation procedures, compared to typical group AHP for obtaining a group solution. This approach, reflecting the diversification of group members' opinions as they are, is conceived to be useful as a tool for obtaining insights into agreements and disagreements with respect to the alternatives among the individuals of a group. The real-world example demonstrates the feasibility of our proposed approach.