1

Multi-Criteria Decision
Making
MCDM Approaches
 Introduction
Zeleny (1982) opens his book “Multiple
Criteria Decision Making” with a statement:

“It has become more and more difficult to

see the world around us in a unidimensional
way and to use only a single criterion when
judging what we see”

2
 Introduction
 Many public sector problems and even
private decision involve multiple objectives
and goals. As an example:
 Locating a nuclear power plant involves
objectives such as:

• Safety
• Health
• Environment
• Cost
3
 Examples of Multi-Criteria
Problems
 In a case study on the management of R&D
research (Moore et. al 1976), the following
objectives have been identified:

• Profitability
• Growth and diversity of the product line
• Increased market share
• Maintained technical capability
• Firm reputation and image
• Research that anticipates competition
4
 Examples of Multi-Criteria
Problems
 In determining an electric route for power
transmission in a city, several objectives
could be considered:

• Cost
• Health
• Reliability
• Importance of areas
5
 Examples of Multi-Criteria
Problems
 In selecting a major at KFUPM, several
objectives can be considered. These
objectives or criteria include:
• Job market upon graduation
• Job pay and opportunity to progress
• Interest in the major
• Likelihood of success in the major
• Future job image
• Parent wish
6
 Examples of Multi-Criteria
Problems
 Wife selection problem. This problem is a
good example of multi-criteria decision
problem. Criteria include:
• Religion
• Beauty
• Wealth
• Family status
• Family relationship
• Education
7
 Approaches For MCDM
 Several approaches for MCDM exist. We
will cover the following:

• Weighted score method ( Section 5.1 in text

book).
• TOPSIS method
• Analytic Hierarchy Process (AHP)
• Goal programming ?

8
 Weighted score method
 Determine the criteria for the problem
 Determine the weight for each criteria. The
weight can be obtained via survey, AHP,
etc.
 Obtain the score of option i using each
criteria j for all i and j
 Compute the sum of the weighted score for
each option .

9
 Weighted score method
 In order for the sum to make sense all criteria
scale must be consistent, i.e.,
 More is better or less is better for all criteria

Example:
 In the wife selection problem, all criteria
(Religion, Beauty, Wealth, Family status, Family
relationship, Education) more is better
 If we consider other criteria (age, dowry) less is
better
10
 Weighted score method
 Let Sij score of option i using criterion j
 wj weight for criterion j
 Si score of option i is given as:

Si =  wj Sij
j

The option with the best score is selected.

11
 Weighted Score Method
 The method can be modified by using
U(Sij) and then calculating the weighted
utility score.
 To use utility the condition of separability
must hold.
 Explain the meaning of separability:
U(Si) =  wj U(Sij)
U(Si)  U( wj Sij)
12
Example Using Weighted Scoring
Method
 Objective
• Selecting a car

 Criteria
• Style, Reliability, Fuel-economy

 Alternatives
• Civic Coupe, Saturn Coupe, Ford Escort,
Mazda Miata
13
 Weights and Scores
Weight 0.3 0.4 0.3 Si

Style Reliability Fuel Eco.

Civic 7 9 9 8.4
Saturn 8 7 8 7.6
Ford 9 6 8 7.5
Mazda 6 7 8
7.0

14
 TOPSIS METHOD
 Technique of Order Preference by
Similarity to Ideal Solution
 This method considers three types of
attributes or criteria

• Qualitative benefit attributes/criteria

• Quantitative benefit attributes
• Cost attributes or criteria

15
 TOPSIS METHOD
 In this method two artificial alternatives are
hypothesized:

 Ideal alternative: the one which has the best level

for all attributes considered.
 Negative ideal alternative: the one which has the
worst attribute values.

 TOPSIS selects the alternative that is the closest to

the ideal solution and farthest from negative ideal
alternative.
16
 Input to TOPSIS
 TOPSIS assumes that we have m alternatives
(options) and n attributes/criteria and we have the
score of each option with respect to each criterion.

 Let xij score of option i with respect to criterion j

We have a matrix X = (xij) mn matrix.
 Let J be the set of benefit attributes or criteria
(more is better)
 Let J' be the set of negative attributes or criteria
(less is better)
17
 Steps of TOPSIS

 Step 1: Construct normalized decision

matrix.
 This step transforms various attribute
dimensions into non-dimensional attributes,
which allows comparisons across criteria.
 Normalize scores or data as follows:

rij = xij/ (x2ij) for i = 1, …, m; j = 1, …, n

i
18
 Steps of TOPSIS
 Step 2: Construct the weighted normalized
decision matrix.
 Assume we have a set of weights for each
criteria wj for j = 1,…n.
 Multiply each column of the normalized
decision matrix by its associated weight.
 An element of the new matrix is:

vij = wj rij
19
 Steps of TOPSIS
 Step 3: Determine the ideal and negative ideal
solutions.

 Ideal solution.
A* = { v1* , …, vn*}, where
vj* ={ max (vij) if j  J ; min (vij) if j  J' }
i i

 Negative ideal solution.

A' = { v1' , …, vn' }, where
v' = { min (vij) if j  J ; max (vij) if j  J' }
i i

20
 Steps of TOPSIS

 Step 4: Calculate the separation measures for each

alternative.

 The separation from the ideal alternative is:

Si * = [  (vj*– vij)2 ] ½ i = 1, …, m
j

 Similarly, the separation from the negative ideal

alternative is:
S'i = [  (vj' – vij)2 ] ½ i = 1, …, m
j

21
 Steps of TOPSIS
 Step 5: Calculate the relative closeness to
the ideal solution Ci*

Ci* = S'i / (Si* +S'i ) , 0  Ci*  1

Select the option with Ci* closest to 1.

WHY ?
22
Applying TOPSIS Method to
Example
Weight 0.1 0.4 0.3 0.2
Style Reliability Fuel Eco. Cost

Civic 7 9 9 8

Saturn 8 7 8 7

Ford 9 6 8 9

Mazda 6 7 8 6

23
 Applying TOPSIS to Example
 m = 4 alternatives (car models)
 n = 4 attributes/criteria

 xij = score of option i with respect to criterion j

X = {xij} 44 score matrix.
 J = set of benefit attributes: style, reliability, fuel
economy (more is better)
 J' = set of negative attributes: cost (less is better)

24
 Steps of TOPSIS
 Step 1(a): calculate (x2ij )1/2 for each column
Style Rel. Fuel Cost
Civic 49 81 81 64

Saturn 64 49 64 49

Ford 81 36 64 81

Mazda 36 49 64 36
xij2i 230 215 273 230

(x2)1/2 15.17 14.66 16.52 15.17 25

 Steps of TOPSIS

 Step 1 (b): divide each column by (x2ij )1/2

to get rij
Style Rel. Fuel Cost
Civic 0.46 0.61 0.54 0.53

Saturn 0.53 0.48 0.48 0.46

Ford 0.59 0.41 0.48 0.59

Mazda 0.40 0.48 0.48 0.40

26
 Steps of TOPSIS

 Step 2 (b): multiply each column by wj to

get vij.
Style Rel. Fuel Cost
Civic 0.046 0.244 0.162 0.106

Saturn 0.053 0.192 0.144 0.092

Ford 0.059 0.164 0.144 0.118

Mazda 0.040 0.192 0.144 0.080

27
 Steps of TOPSIS

 Step 3 (a): determine ideal solution A*.

A* = {0.059, 0.244, 0.162, 0.080}
Style Rel. Fuel Cost
Civic 0.046 0.244 0.162 0.106

Saturn 0.053 0.192 0.144 0.092

Ford 0.059 0.164 0.144 0.118

Mazda 0.040 0.192 0.144 0.080

28
 Steps of TOPSIS

 Step 3 (a): find negative ideal solution A'.

A' = {0.040, 0.164, 0.144, 0.118}

Style Rel. Fuel Cost

Civic 0.046 0.244 0.162 0.106

Saturn 0.053 0.192 0.144 0.092

Ford 0.059 0.164 0.144 0.118

Mazda 0.040 0.192 0.144 0.080

29
 Steps of TOPSIS
 Step 4 (a): determine separation from ideal
solution A* = {0.059, 0.244, 0.162, 0.080}
Si* = [  (vj*– vij)2 ] ½ for each row
j

Style Rel. Fuel Cost

Civic (.046-.059)2 (.244-.244)2 (0)2 (.026)2

Saturn (.053-.059)2 (.192-.244)2 (-.018)2 (.012)2

Ford (.053-.059)2 (.164-.244)2 (-.018)2 (.038)2

Mazda (.053-.059)2 (.192-.244)2 (-.018)2 (.0)2
30
 Steps of TOPSIS

 Step 4 (a): determine separation from ideal

solution Si*

(vj*–vij)2 Si* = [  (vj*– vij)2 ] ½

Civic 0.000845 0.029

Saturn 0.003208 0.057

Ford 0.008186 0.090

Mazda 0.003389 0.058

31
 Steps of TOPSIS
 Step 4 (b): find separation from negative ideal
solution A' = {0.040, 0.164, 0.144, 0.118}
Si' = [  (vj'– vij)2 ] ½ for each row
j

Style Rel. Fuel Cost

Civic (.046-.040)2 (.244-.164)2 (.018)2 (-.012)2

Saturn (.053-.040)2 (.192-.164)2 (0)2 (-.026)2

Ford (.053-.040)2 (.164-.164)2 (0)2 (0)2

Mazda (.053-.040)2 (.192-.164)2 (0)2 (-.038)2
32
 Steps of TOPSIS

 Step 4 (b): determine separation from

negative ideal solution Si'

(vj'–vij)2 Si' = [  (vj'– vij)2 ] ½

Civic 0.006904 0.083

Saturn 0.001629 0.040

Ford 0.000361 0.019

Mazda 0.002228 0.047

33
 Steps of TOPSIS

 Step 5: Calculate the relative closeness to

the ideal solution Ci* = S'i / (Si* +S'i )

S'i /(Si*+S'i) Ci*

Civic 0.083/0.112 0.74  BEST

Saturn 0.040/0.097 0.41

Ford 0.019/0.109 0.17

Mazda 0.047/0.105 0.45

34