3.1 The AHP Analysis Model
Step 1: According to Figure 3, it is clear that the user of
this decision support model is the major manufacturer
who already owns at least one distribution centre (DC)
and is considering investing in the logistics distribution
network between its DCs to customers. After close
consultation with the logistics industry to obtain a
practical point of view, three alternatives have been
defined for the logistics distribution network system:
outsourcing, own network, and mixed approach
transportation, which are used in the models.
The “Outsourcing” means the manufacturer completely
sub-contracts transporting to the third party company,
whilst the “Own Network” means the manufacturer
establishes as a 100% owned transporting division to do
the transport. The “Mixed Approach” means the
manufacturer has a joint venture with a transporting
company, so the transport company also needs to
transport other products from other companies. The aim
of the model is to prioritise the alternative in logistics
distribution network, from both customer and
distribution centre viewpoint. Figure 3 illustrates the
Logistics Distribution Network that is used in the
model.
In order to get holistic priorities of logistics
distribution network based upon both DC operator and
customers satisfaction, the AHP structure of logistics
distribution network model needs to be separated into
two structures. The first structure is focused on the
customer. The second structure is focused on the DC
operator.