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    Ahp

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    Muhammad Faisal Ibrahim
    The Analytic Hierarchy Process (AHP) is a multi-criteria decision making method developed by Saaty in 1980. It allows for both qualitative and quantitative criteria to be used in evaluating alternatives. The AHP involves structuring objectives, criteria and alternatives into a hierarchy, then making pairwise comparisons to determine criteria weights and alternative priorities. An example of using AHP to select a car is provided, showing the hierarchy development, pairwise comparison matrices, and priority vector calculations. Consistency is also checked to validate the results. The AHP is a widely applied decision making approach in areas like product selection, project choice, and resource allocation.

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    Ahp

    Uploaded by

    Muhammad Faisal Ibrahim
    79 views19 pages
    The Analytic Hierarchy Process (AHP) is a multi-criteria decision making method developed by Saaty in 1980. It allows for both qualitative and quantitative criteria to be used in evaluating alternatives. The AHP involves structuring objectives, criteria and alternatives into a hierarchy, then making pairwise comparisons to determine criteria weights and alternative priorities. An example of using AHP to select a car is provided, showing the hierarchy development, pairwise comparison matrices, and priority vector calculations. Consistency is also checked to validate the results. The AHP is a widely applied decision making approach in areas like product selection, project choice, and resource allocation.

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    The Analytic Hierarchy Process (AHP) is a multi-criteria decision making method developed by Saaty in 1980. It allows for both qualitative and quantitative criteria to be used in evaluating alternatives. The AHP involves structuring objectives, criteria and alternatives into a hierarchy, then making pairwise comparisons to determine criteria weights and alternative priorities. An example of using AHP to select a car is provided, showing the hierarchy development, pairwise comparison matrices, and priority vector calculations. Consistency is also checked to validate the results. The AHP is a widely applied decision making approach in areas like product selection, project choice, and resource allocation.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    79 views19 pages

    Ahp

    Uploaded by

    Muhammad Faisal Ibrahim
    The Analytic Hierarchy Process (AHP) is a multi-criteria decision making method developed by Saaty in 1980. It allows for both qualitative and quantitative criteria to be used in evaluating alternatives. The AHP involves structuring objectives, criteria and alternatives into a hierarchy, then making pairwise comparisons to determine criteria weights and alternative priorities. An example of using AHP to select a car is provided, showing the hierarchy development, pairwise comparison matrices, and priority vector calculations. Consistency is also checked to validate the results. The AHP is a widely applied decision making approach in areas like product selection, project choice, and resource allocation.

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    MIS 463

    Analytic Hierarchy Process

    The Analytic Hierarchy Process (AHP)

    Founded by Saaty in 1980.


    It is a popular and widely used method for
    multi-criteria decision making.
    Allows the use of qualitative, as well as
    quantitative criteria in evaluation.
    Wide range of applications exists:

    Selecting a car for purchasing


    Deciding upon a place to visit for vacation
    Deciding upon an MBA program after graduation.

    AHP-General Idea

    Develop an hierarchy of decision criteria and define the


    alternative courses of actions.

    AHP algorithm is basically composed of two steps:


    1. Determine the relative weights of the decision criteria
    2. Determine the relative rankings (priorities) of alternatives

    ! Both qualitative and quantitative information can be


    compared by using informed judgments to derive
    weights and priorities.

    Example: Car Selection

    Objective

    Criteria

    Selecting a car
    Style, Reliability, Fuel-economy

    Cost?

    Alternatives

    Civic Coupe, Saturn Coupe, Ford Escort, Mazda


    Miata

    Hierarchy tree
    Selecting
    a New Car

    Style

    Civic

    Reliability

    Saturn

    Fuel Economy

    Escort

    Miata

    Alternative courses of action


    5

    Ranking of Criteria and Alternatives

    Pairwise comparisons are made with the grades


    ranging from 1-9.

    A basic, but very reasonable assumption for


    comparing alternatives:
    If attribute A is absolutely more important than attribute B
    and is rated at 9, then B must be absolutely less
    important than A and is graded as 1/9.

    These pairwise comparisons are carried out for


    all factors to be considered, usually not more
    than 7, and the matrix is completed.
    6

    Ranking Scale for Criteria and Alternatives

    Ranking of criteria
    Style

    Reliability

    Fuel Economy

    Style

    1/2

    Reliability

    1/3

    1/4

    Fuel Economy

    Ranking of priorities

    Consider [Ax = maxx] where

    A is the comparison matrix of size nn, for n criteria, also called the priority matrix.
    x is the Eigenvector of size n1, also called the priority vector.
    max is the Eigenvalue, max > n.

    To find the ranking of priorities, namely the Eigen Vector X:


    1) Normalize the column entries by dividing each entry by the sum of the column.
    2) Take the overall row averages.

    A=

    1
    0.5 3
    2
    1
    4
    0.33 0.25 1.0

    Column sums 3.33 1.75

    8.00

    Normalized
    Column Sums

    0.30
    0.60
    0.10

    0.29
    0.57
    0.14

    1.00

    1.00

    0.38
    0.50
    0.13
    1.00

    Row
    averages

    X=

    0.30
    0.60
    0.10

    Priority vector

    Criteria weights
    Style
    .30
    Reliability
    .60
    Fuel Economy .10
    Selecting a New Car
    1.00

    Style
    0.30

    Reliability
    0.60

    Fuel Economy
    0.10

    10

    Checking for Consistency

    The next stage is to calculate a Consistency Ratio


    (CR) to measure how consistent the judgments have
    been relative to large samples of purely random
    judgments.

    AHP evaluations are based on the aasumption that


    the decision maker is rational, i.e., if A is preferred to
    B and B is preferred to C, then A is preferred to C.

    If the CR is greater than 0.1 the judgments are


    untrustworthy because they are too close for comfort
    to randomness and the exercise is valueless or must
    be repeated.
    11

    Calculation of Consistency Ratio

    The next stage is to calculate max so as to lead to


    the Consistency Index and the Consistency Ratio.
    Consider [Ax = max x] where x is the Eigenvector.
    A

    1
    0.5
    2
    1
    0.333 0.25

    3
    4
    1.0

    Ax

    0.30
    0.60
    0.10

    0.90
    1.60
    0.35

    0.30
    0.60
    0.10

    = max

    max=average{0.90/0.30, 1.60/0.6, 0.35/0.10}=3.06


    Consistency

    index , CI is found by
    CI=(max-n)/(n-1)=(3.06-3)/(3-1)= 0.03
    12

    Consistency Ratio

    The final step is to calculate the Consistency Ratio, CR by using


    the table below, derived from Saatys book. The upper row is the
    order of the random matrix, and the lower row is the
    corresponding index of consistency for random judgments.

    Each of the numbers in this table is the average of CIs derived from a
    sample of randomly selected reciprocal matrices of AHP method.
    An inconsistency of 10% or less implies that the adjustment is small as
    compared to the actual values of the eigenvector entries.
    A CR as high as, say, 90% would mean that the pairwise judgments are just
    about random and are completely untrustworthy! In this case, comparisons
    should be repeated.
    In the above example: CR=CI/0.58=0.03/0.58=0.05
    0.05<0.1, so the evaluations are consistent!
    13

    Ranking alternatives
    Style
    Civic

    Civic
    1

    Saturn

    1/4

    Escort
    Miata

    1/4
    6

    1/4
    4

    1
    5

    1/5
    1

    Reliability Civic
    Civic
    1

    Saturn
    1/4

    Saturn
    2

    Escort Miata
    4
    1/6

    Escort Miata
    5
    1

    Saturn

    1/2

    Escort
    Miata

    1/5
    1

    1/3
    1/2

    1
    4

    1/4
    1

    Priority vector

    0.13
    0.24
    0.07
    0.56

    0.38
    0.29
    0.07
    0.26
    14

    Ranking alternatives
    Fuel Economy

    Miles/gallon

    Normalized

    Civic

    34

    .30

    Saturn
    Escort
    Miata

    27
    24
    28
    113

    .24
    .21
    .25
    1.0

    ! Since fuel economy is a quantitative measure, fuel consumption


    ratios can be used to determine the relative ranking of alternatives;
    however this is not obligatory. Pairwise comparisons may still be
    used in some cases.

    15

    Selecting a New Car


    1.00

    Style
    0.30
    Civic
    Saturn
    Escort
    Miata

    Reliability
    0.60
    0.13
    0.24
    0.07
    0.56

    Civic
    Saturn
    Escort
    Miata

    0.38
    0.29
    0.07
    0.26

    Fuel Economy
    0.10
    Civic
    0.30
    Saturn 0.24
    Escort 0.21
    Miata 0.25

    16

    Fuel
    Economy

    Reliability

    Style

    Ranking of alternatives

    Civic

    .13

    .38 .30

    Saturn
    Escort

    .24

    .29 .24

    .07

    .07 .21

    Miata

    .56

    .26 .25

    Priority matrix

    .30
    x

    .60

    .10

    .30
    .27
    =
    .08
    .35

    Criteria Weights

    17

    Additional constraints

    It is often necessary that several alternatives have to be selected


    subject to a set of goals.
    In this case an LP can be constructed with binary decision
    variables, which gives the selection of r actions, among n
    alternatives.
    Let xi=1 if media i is selected and 0 otherwise, i=1,2,...,6.
    (Ai) are the relative weight of media i, i=1,2,...,6.
    Max (A1) x1 + + (A6) x6
    Subject to
    x1 + x2 + x3 + x4 + x5 + x6 2 (at least 2 media should be selected)
    x1 + x2 + x3 + x4 + x5 + x6 4 (at most 4 media should be selected.)
    x1 + x2 = 1 (choose exactly one newspaper)
    x5 + x6 = 1 ((choose exactly 1 TV channel)
    625 x1 + 550 x2 + 250 x3 + 150 x4 + 175 x5 + 750 x6 1200 (min. expected
    return)
    - 60 x1 - 30 x2 + 40 x3 + 92 x4 + 52 x5 + 80 x6 0 (cost of advertising in
    newspapers should be less than 50% of total costs)
    18

    References
    Al Harbi K.M.A.S. (1999), Application of AHP in Project Management, International
    Journal of Project Management, 19, 19-27.
    Haas R., Meixner, O., (2009) An Illustrated Guide to the Analytic Hierarchy Process,
    Lecture Notes, Institute of Marketing & Innovation, University of Natural Resources,
    retrieved from http://www.boku.ac.at/mi/ on October 2009.

    Saaty, T.L., Vargas, L.G., (2001), Models, Methods, Concepts & Applications of the
    Analytic Hierarchy Process, Kluwers Academic Publishers, Boston, USA.
    Brans, J.P., Mareschal, B., (2010) How to Decide with Promethee, retrieved from
    http://www.visualdecision.com on October 2010.

    19

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