TOPSIS method for quality credit evaluation: A case of air-conditioning market in China

https://doi.org/10.1016/j.jocs.2013.02.001Get rights and content

Abstract

Quality credit is a new concept invented in China and to the best of our knowledge, there hasn’t been a widely-accepted quality credit indicator system and no quantitative method has been employed in quality credit evaluation up to now. To take the researches on quality credit a step further, this paper aims to establish a quality credit evaluation indicator system for air-conditioning enterprises in Chinese market and use TOPSIS (technique for order preference by similarity to ideal solution) method to evaluate quality credit of the enterprises. Based on the data of 8 air-conditioning enterprises, including 6 Chinese enterprises and 2 Japanese enterprises, three experiments with three different indicator systems are used to determine the final indicator system and verify the feasibility and effectiveness of TOPSIS. In Experiment one, an original indicator system is established to evaluate the quality credit of the 8 enterprises. In Experiment two and three, two reasonably adjusted indicator systems are used and the indicator system in Experiment three is the final one that we recommend. The analysis of experiments verifies that the proposed quality credit indicator system is reliable and TOPSIS is suitable for quality credit evaluation.

Highlights

► A quality credit indicator system for air-conditioning enterprises in China market is proposed. ► TOPSIS is used to evaluate quality credit of the enterprises. ► Eight air-conditioning enterprises are evaluated in the experiment. ► The experiment results show that the proposed indicator system is reliable. ► It is also verified that TOPSIS has three advantages in quality credit evaluation.

Introduction

In recent years Chinese food enterprises have experienced unprecedented quality credit crisis. Some enterprises collapse instantly owing to their terrible quality credit while others struggle to survive. Quality credit is a new concept invented in China in 2002 by Chinese central government. Afterwards, several organizations such as China National Institute of Standardization and China Product Quality Association have devoted energy to studying quality credit. Two Chinese government documents on quality credit have been issued in 2006 and 2009 up to now [1], [2], in which the definition of quality credit and some relative terms are proposed initially.

Quality credit is an important component of enterprise credit, that is, quality credit reflects the enterprise's credit in the field of product quality. The enterprise credit comprehensively reflects the overall credit of enterprises. The credit between the enterprise and the bank, the credit between the enterprises and other enterprises, the credit between the enterprise and the government, the credit between the enterprises and the consumer and so on are all the components of enterprise credit. The credit between the enterprise and the consumer is the quality credit reflecting whether the enterprise offers products or services to the consumer as promissory quality.

Quality credit evaluation result, such as credit score or rank, is an objective and concise reference for the consumer, government and enterprise in decision making. For consumers, quality credit score can be used as a reference when they want to buy products from enterprises. Consumers are faced with a large amount of alternative products all the time and how to choose a worthy product is a question. If the quality credit score result is accessible to the consumer, they can easily choose the product from the enterprise with high quality credit score. For government, the quality credit scores are the reference for supervision. The enterprises with low quality credit score should be in the key regulatory target list. On the contrary, the government could reward the high quality credit enterprises so as to encourage them. For enterprises, the quality credit score can tell themselves whether their quality credits are good enough. An interpretable credit scoring method can also tell them which aspects they should improve to promote their quality credits.

Although the concept of quality credit and its evaluation results are very important, the researches on quality credit are still in a very preliminary stage. To the best of our knowledge, there is no relevant English research paper on quality credit. Even the number of Chinese researches is very small. Those Chinese papers and Chinese government documents focus on discussing the definition and indicator system of quality credit. The proposed indicator systems in those Chinese papers are very sophisticated and different from each other. Up to now, there is no widely-accepted indicator system for quality credit and no quantitative method is employed to quality credit evaluation.

The first objective of this study is to put forward a concise quality credit evaluation indicator system for air-conditioning enterprises in Chinese market. TOPSIS is an interpretable evaluation method which can give each evaluated object a specific score. So the second objective of this paper is to use TOPSIS method to evaluate the quality credit of the enterprises. The experiment results verify that the proposed indicator system is reliable and using TOPSIS to evaluate quality credit is feasible and effective.

The rest of this study is organized as follows. Section 2 discusses the definition and evaluation of quality credit. Section 3 introduces the TOPSIS method. Section 4 presents a detailed case of quality credit evaluation for air-conditioning enterprises in Chinese market. Section 5 provides conclusions and possible future directions.

Section snippets

Quality credit definition and evaluation

Quality credit is first proposed to describe enterprise's capacity and performance of complying with laws as well as the commitment to its product quality by the General Administration of Quality Supervision, Inspection and Quarantine (GAQSIQ) of the People's Republic of China [1]. In 2009 the GAQSIQ and Standardization Administration of People's Republic of China (SAC) jointly release a national standard in which the quality credit is defined as the capacity of the enterprise to obtain and

TOPSIS for quality credit evaluation

Credit evaluation is a hotspot in researches. Many mathematical models, such as support vector machine (SVM), modified SVM [4], [5], decision tree (DT), linear discriminant analysis (LDA), quadratic discriminant analysis (QDA), logistic regression (log R) and k-nearest neighbour classifier (k-NN), have been applied to credit evaluation so far [6]. Generally speaking, accuracy, complexity and interpretability are accepted as three major criterions in choosing credit evaluation methods [7].

Experiment design

In this experiment, TOPSIS is applied to evaluate the quality credit of 8 air-conditioning enterprises in Chinese market. Three experiments are conducted in this section. In Experiment one, all enterprises are evaluated based on the initially proposed indicator system. However, the evaluation results seem irrational. So in Experiment two, an indicator, sales growth, are removed and all the enterprises are evaluated based on the remaining indicators. Moreover, in the remaining indicators, it is

Conclusion

Quality credit is a new concept which emerges in China and there are only a few researches on it so far. In this study, a quality credit indicator system is proposed for air-conditioning enterprises in Chinese market and TOPSIS method is employed to evaluate quality credit of the enterprises. The data of 8 enterprises, including 6 Chinese enterprises and 2 Japanese enterprises, is used in the experiments. The experiment results show that the proposed indicator system is reliable. Also, it is

Acknowledgements

This research is partially supported by National Science Foundation of China (No. 71071148), the Youth Innovation Promotion Association of Chinese Academy of Sciences and construction of the science and technology infrastructure plan supported by Department of Science and Technology of Jiangsu Province.

Xiaoqian Zhu received her B.S. in Information Management and System in July 2010 from University of Science and Technology of China. She is now a Ph.D. candidate in University of Chinese Academy of Sciences. Her major is Management Science and Engineering and her interests focus on credit scoring and bank risk management.

References (19)

There are more references available in the full text version of this article.

Cited by (10)

  • A novel TOPSIS evaluation scheme for cloud service trustworthiness combining objective and subjective aspects

    2018, Journal of Systems and Software
    Citation Excerpt :

    Most important of all, compared to other MCDM methods, it can make better use of various quantitative attribute information (Behzadian et al., 2012). In addition, TOPSIS has been proved to be an effective way to evaluate quality credit because of its benefits (Zhu et al., 2014). In fact, there is a high similarity between the quality credit evaluation and cloud service trustworthiness evaluation.

View all citing articles on Scopus

Xiaoqian Zhu received her B.S. in Information Management and System in July 2010 from University of Science and Technology of China. She is now a Ph.D. candidate in University of Chinese Academy of Sciences. Her major is Management Science and Engineering and her interests focus on credit scoring and bank risk management.

Fei Wang received his B.S. in logistics engineering from Beijing University of Posts and Telecommunications, China in July 2010. He is the candidate of M.S. in logistics engineering in University of Chinese Academy of Sciences and is expected to graduate by July 2013. His research interests involve in credit evaluation, oil import portfolio, data mining, intelligent algorithms and decision support system.

Haiyang Wang is a professor, executive dean of Jiangsu Province Institute of Quality & Safety Engineering. She got doctor degree of Engineering in Management Science and Engineering from Nanjing University of Science (China) in 2003.Now she also act as dean, master instructor of department of management science and engineering in NanJing University of Finance. Her research interests cover quality management, traffic economy, quality standard, strategic management, industry technical standard.

Changzhi Liang is a graduate student in the University of Chinese Academy of Sciences. He received his B.S. in Physics at Peking University. His research interests focus on integration of financial risks within commercial banks and systemic risk on the interbank market. He also participated in the funded project ‘The Strategy and Planning of Energy Development for Qinghai Province’.

Run Tang is an assistant researcher of Jiangsu Province Institute of Quality & Safety Engineering. He has a PHD in management science. And he also is lecturer of Nanjing University of Economics and Finance. His research interests include quality management, supply chain management.

Xiaolei Sun is an assistant professor in the Institute of Policy and Management, Chinese Academy of Sciences. She has a PhD in the University of Chinese Academy of Sciences. She has worked in two projects of National Science Foundation of China. Her research interests focus on the risk management, especially on the credit risk.

Jianping Li received the Ph.D. degree in Management Sciences and Engineering from University of Science and Technology of China, Hefei in 2004, and currently is a professor in Institute of Policy and Management, Chinese Academy of Sciences. Prof. Li is the secretary and executive committee member of International Academy of Information Technology and Quantitative Management (IAITDM). His research interests include credit risk assessment, operational risk modelling, country risk modelling and risk integration modelling.

View full text