A study of A/R collection for IC design industry in Taiwan using fuzzy MCDM methodology

Abstract

In this paper, we present a fuzzy multiple criteria decision-making (FMCDM) approach to the evaluation of account receivable (A/R) collection instruments. By considering four collection alternatives, namely: the T/T advance (prepayment), the letter of credit (L/Q, the documentary collection (including D/A and D/P), and the open account (O/A), the FMCDNI approach is for the first time applied to choose the A/R collection instrument for Taiwanese integrated circuit (IQ design industry. Our results show, when face with new customer, the ranking of preference is the T/T advance, the L/C, the O/A and the documentary collection (D/A, D/P). International collection in modern unpredictable global market could be difficult unless firms have taken appropriate collection strategies. We believe that this study provides an alternative for making critical decisions, as in this case, the selection of A/R collection instruments.