Quality & Quantity (2006) 40:577–593 © Springer 2006
Using Fuzzy Sets and Grey Decision-Making to
Construct the Performance Evaluation Model of
Firm’s Outsourcing Management – A Case
Study of Avionics Manufacturer in Taiwan
Department of Business Administration, Chaoyang University of Technology, Taiwan, R.O.C.
Abstract. This study aims to apply Fuzzy Set Theory and Grey Decision-Making to build
a model for a performance evaluation of enterprise’s outsourcing activities. Moreover, the
study took an avionics enterprise in Taiwan as a case study by using the two methods.
Finally, the results were compared and discussed in details to conclude the suitability of the
two methods. The study achieves the following conclusions: (1) the Fuzzy Set Theory and
the Grey Decision-Making are effective methods for industries to evaluate the performance
of outsourcing activities, and (2) in the case study the ﬁndings indicate that the Innova-
tion and Quality categories are the most important weighting in outsourcing activities. Also,
although the Fuzzy Set Theory and the Grey Decision-Making were applied (in other words,
the calculation processes are different), the weighting sequences of evaluation indices have
only a very few differences.
Key words: Fuzzy sets, grey decision-making, outsourcing management, performance
The main problem in managing outsourcing activities effectively is that
companies need to build a suitable evaluation criterion to monitor the pro-
cess and to push the whole activities towards the best proﬁts (Cassidy,
1994; Bence, 1995; Cheon et al., 1995; Grover et al., 1996; Donald, 1998).
Accordingly, the aim of the present study is to construct the evaluating
factors by consulting the evaluation mechanism from famous manufactur-
ers, Honeywell. First, in order to determine the factors in every aspects,
such as strategy, economics, technology, management, costs, and...etc., we
interviewed experts and sought for models for “Outsourcing Objective,”
“Estimate Index” and “Performance Evaluation Criterion”(Raynor, 1992;
Cassidy, 1994; Grover et al., 1996; Donald, 1998). Second, we sought to
establish an evaluating structure, suitable for multi-goal and multi-crite-
ria in the avionics industry. Third, we designed and practiced the research