I think they take into account of the quality of weapons, although they do not consider it to be the only criteria to determine the overall military power of a country. Otherwise they would not have placed North Korea at 18th and South Korea at 7th. Although North Korea have more weapons by number. Some of the strongest and state of the art Air forces like Israel, Saudi Arabia, UAE, Singapore also quite behind in their ranking. I think they mostly determine military power by taking into account on the inherent strength of a country to endure a long and brutal war if a war continues to drag on for many years. In such scenarios, available man power, size of GDP, energy resource base, domestic defence industry, food self sufficiency, merchant marine ship strength etc. come forwards.
In a war scenario, when many foreign supply may become unavailable, domestic self sufficiency became vital for any nation to continue the war efforts. Now suppose, a country has latest quality weapons, but heavily dependent on long distance sea trade to feed it's population, so what would be the fate of such a country if any long term bilateral or regional war break out where normal shipping operation became impossible in that areas? Such country would have no choice other than to sue peace even at unfavorable terms for itself. Because food take precedence over weapons. This is just one aspect, similar case also can be made about man power, GDP size, domestic industry and others. I Think, GFP guys think along these lines to formulate their ranking.