Development of a performance measurement model for manufacturing companies using the AHP and TOPSIS approaches

Abstract

This paper aims to develop a performance measurement model (PMM) that can be used to obtain an overall performance score by measuring the success of a manufacturing company in its operational activities. The developed PMM measures a company's level of performance in critical dimensions and combines these performance scores to obtain a ranking score. A set of critical dimensions and their sub-components is fully defined, and performance scorecards are developed to guide the assignment of performance scores. Performance scores are assigned according to the level of intensity of a manufacturing company's investments, practices, actions or infrastructures in the critical dimensions. The Analytic Hierarchy Process (AHP) approach is used to weight (relative importance) the dimensions and their sub-components. The weights and performance scores are combined by using the Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) approach. An example is provided to illustrate the application of the proposed PMM.

Keywords:

• Performance measurement
• Performance measurement model
• Manufacturing companies
• Multi-attribute decision-making (MADM)
• Analytic Hierarchy Process (AHP)
• Technique for Order Preference by Similarity to Ideal Solution (TOPSIS)