Use the Analytic Hierarchy Process aproach to solve.

AHP includes 3 stages of decision making :

1. Create a hierarchical structure with the goal as top level, criteria at level 2 and alternatives at level 3.

2. Create a pair-wise comparative matrix using scale of relative importance.

3. Make a consistency check which should be less than 0.1.

Consider the problem of a company to design a distribution network The management can even provide the relative importance weights for the above five criteria: Inventory 0.30 Transportation 0.25 Product availability 0.20 Product variety 0.10 Customer experience 0.15 Formulate the network design decision problem as a multi criteria problem and apply the AHP approach. What will be your recommendation to the management? Inventory Transportation Product Availability Product variety Alternatives 4 1 1 4 1 1 Customer Experience 5 4 1 Criteria Retail storage with customer pick-up Manufacturer storage with direct shipping Manufacturer storage with in-tranzit merge Distributor storage with package carrier delivery Distributor storage with last mile delivery Manufacturer storage with pick-up 1 1 1 3 1 2 3 3 2 2 2 3 1 N 3 5 1 1 5 1