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

Abstract

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.

Keywords:

• information systems
• enterprise resource planning
• simulation
• analytic hierarchy process
• group decision making