The Analytic Hierarchy Process - Angelfire

118 Pages·2006·3.71 MB·English

The Analytic Hierarchy
Process
M. En C. Eduardo Bustos Farías
Outline of Lecture
Summary
(cid:81)
MADM ranking methods
(cid:81)
(cid:92) Examples
(cid:93) Analytic Hierarchy Process (AHP)
(cid:92) Examples
(cid:92) pairwise comparisons
(cid:92) normalization
(cid:92) consistency
Investi(cid:92)gacisónc doe res M. En C. Eduardo Bustos Farías 2
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Summary
(cid:93) Discrete decision problems involving two or more
conflicting criterion or objectives:
(cid:92) Choosing Among Job Offers:
(cid:91) salary, location, career potential, etc.
(cid:92) Selecting a Camcorder:
(cid:91) price, warranty, zoom, weight, lighting, etc.
(cid:92) Choosing Among Job Applicants:
(cid:91) education, experience, personality, etc.
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MADM Methods
We’ll consider one MADM technique for these types of
(cid:88)
problems:
–The Analytic Hierarchy Process (AHP)
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The Multicriteria Scoring
Model
(cid:93) Score (or rate) each alternative on each criterion.
(cid:93) Assign weights the criterion reflecting their relative
importance.
For each alternative i, compute a weighted average
(cid:88)
score as:
n
V = ∑ w r
i j
ij
j = 1
w = weight for criterion j
j
r = transformed score for alternative i on
ij
criterion j
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The Analytic Hierarchy
Process
(cid:93) A formalization of our intuitive understanding of a
complex problem using a hierachical structure
(cid:93) Enables DM to structure a MADM problem visually in an
attribute hierarchy
(cid:93) A hierarchy has at least three levels:
(cid:92) focus or overall goal (top)
(cid:92) multiple criteria (attributes) that define alternatives
(middle)
(cid:92) competing alternatives at the bottom
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Analytic Hierarchy Process
The Analytic Hierarchy Process
(AHP), is a procedure designed to quantify
managerial judgments of the relative
importance of each of several conflicting
criteria used in the decision making
process.
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Analytic Hierarchy Process
(cid:93) Analytic
(cid:93) Hierarchy
(cid:93) Process
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Analytic
(cid:92) Analytic is a form of the word analysis, which means the
separating of any material or abstract entity into its
constituent elements.
(cid:91) financial analysis
(cid:91) marketing analysis
(cid:91) operations analysis
(cid:91) …
(cid:92) Analysis is the opposite of synthesis, which involves
putting together or combining parts into a whole
(cid:92) In a sense, AHP should really be called the Synthesis
Hierarchy Process because at its core, AHP helps us
measure and synthesize the multitude of factors
involved in complex decisions.
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Hierarchy
(cid:91) “Large organizations are almost universally hierarchical in structure
(cid:91) They are divided into units which are subdivided into smaller units, which
are, in turn, subdivided and so on.
(cid:91) Hierarchical subdivision is not a characteristic that is peculiar to human
organizations. It is common to virtually all complex systems of which we
have knowledge
(cid:91) The near universality of hierarchy in the composition of complex systems
suggest that there is something fundamental in this structural principle that
goes beyond the peculiarities of human organization
(cid:91) An organization will tend to assume hierarchical form whenever the task
environment is complex relative to the problem-solving and communicating
powers of the organization members and their tools
(cid:91) Hierarchy is the adaptive form for finite intelligence to assume in the face of
complexity.”
• L.L. Whyteexpressed this thought as follows:
• “The immense scope of hierarchical classification is clear. It is the most powerful
method of classification used by the human brain-mind in ordering experience,
observations, entities and information. The use of hierarchicalordering must be as
old as human thought, conscious and unconscious.”
– L.L. Whyte, Hierarchical Structures, American Elsevier, New York, N.Y., 1969
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