Value chain analysis using hybrid simulation and AHP

This paper presents a novel approach that integrates the analytic hierarchy process (AHP) technique, system dynamics (SD), and discrete-event simulation (DES) to model the service and manufacturing activities of the global supply chain of a multinational construction equipment corporation. Hybrid SD-DES simulation models offer a practical approach to better model real-life systems and increase confidence in their outcomes. The DES models are developed using the supply chain operations reference (SCOR) model to guide the modeling process. Managers evaluate the competing decision alternatives based on the obtained simulation results of the hybrid models and other qualitative factors using group AHP analysis. This integration enables managers to utilize their own experiences, preferences and qualitative assessments which increases the level of their confidence in the decisions resulting in the maximization of shareholder value.