Installation of a sugar beet production plant using AHP

Abstract

One real organization has as main activity the development of agro-industrial activities, namely, the refining of sugar and its commercialization, as well as derivatives products, with operations that are carried out through its manufacturing unit. Its headquarter is in Portugal and it has a branch office in Spain. In 2017, new regulations were introduced for the European Union sugar market, leaving production and marketing without quotas. One of the main consequences of this measure in Portugal was the increase of 17% of the cultivated area of white beet in 2017.

In this work, we aim to evaluate the best location for the installation of a new beet sugar production plant in Portugal. Because the location problem is one of the most important strategic issues faced by decision-makers, deciding where to locate a plant is always a key decision. Therefore, the selection of judgment criteria, as well as the evaluation of alternatives, are critical elements in the process of choosing the best location. When considering this complex problem with multiple criteria, one of the existing and adequate methods to support the decision is the Hierarchical Analysis Method (AHP), which was created in 1980 by Professor L. Saaty of the University of Pittsburgh. This method allows the use qualitative and quantitative criteria in the evaluation process. The basic principle of AHP is to divide the decision problem into several hierarchical levels, and to discover the relationship between them, by determining the relative importance of each criterion, at each hierarchical level, by comparison. The main steps of the AHP method are as follows: construction of the decision hierarchy (objective, criteria and alternatives); establishment of the comparison matrix (in pairs) using the Saaty Fundamental Scale; obtaining the relative priority of each criteria (including normalization of values and obtaining priority vector); assessing the consistency of relative priorities; constructing a parity comparison matrix for each criteria, considering each one of the selected alternatives and, finally, obtaining the composite priority for the different alternatives.

In this case study, the alternatives are the localities of Beja, Coruche and Elvas. Seven criteria were identified, all on the same level: proximity to suppliers; availability of crop area; proximity of consumer markets in Portugal; proximity of consumer markets in Spain; yield; investment in infrastructures and finally the proximity to technical assistance. The result obtained through the application of the AHP method, determined as the first location option Beja, then Coruche and finally Elvas. In the comparison between the relative weights, given the criteria, the predominant factor was the availability of cultivation area with 31%, followed by proximity to the consumer market in Portugal with 20%.

The definition of this model helped the decision, which could be certainly supported by another set of factors, frequently founded in this type of complex decision process, where financial and political aspects interrelate.