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Professional Proofreading Assignment

Study on the process of solving multi-criteria decision problems using analytic hierarchy process (AHP)

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Added on  2023-04-21

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This document is a professional proofreading assignment that discusses the process of multi-criteria decision making using AHP (Analytic Hierarchy Process) and Data Envelopment Analysis (DEA). It provides definitions, advantages, and calculations for both methods. The document also highlights the advantages and disadvantages of AHP and DEA models.

Professional Proofreading Assignment

Study on the process of solving multi-criteria decision problems using analytic hierarchy process (AHP)

   Added on 2023-04-21

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A. Multi-Criteria Decision Making – AHP
The Multi-Criteria Decision Making (MCDM) is a "method of optimizing complex decisions
with multiple criteria or objectives" and can be divided into two types (Zimmermann, 1991):
Types Description
Multiple Objective Decision
Making
- The search for alternatives that best satisfy the given
purpose in an infinite set of alternatives
- Weighting method, ε-constraint method, multipurpose
linear programming method, etc.
Multiple Attribute Decision
Making
- Determine the order of preference for a finite set of
alternatives
- Target Achievement Evaluation Method, Multifactor
Utility Function Method, Rating Model, Outranking
Method, AHP, etc.
The MODM technique assumes that the alternatives are infinite and finds an option that minimises the
deviation from the set of goals in this infinite set of other options. On the other hand, decision-making
provides a number of alternatives that reflect the most preferred choices among these limited
alternatives. Therefore, this study discusses in depth the process of solving problems concerning the
multi-criteria decisions using AHP (Analytic Hierarchy Process).
1. Definition and Advantage of AHP and Researches of its Application
It is a method to divide the whole process of decision making into several stages and then to
analyse and interpret it systematically to help rational decision-making. The areas that are being utilised
are the government's policy decisions, the establishment of various election strategies, conflict
management and dissolution, preliminary feasibility study and feasibility assessment, budget allocation,
R & D project selection, new product development, Performance evaluation, economic analysis, and so
on (T. Saaty (1977, 1980, 1988, 1995). The advantages of AHP are simple to express decision-making
processes as well as efficient in terms of time and cost which can improve the quality of decision-
Professional Proofreading Assignment_2
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making. Besides, decision-makers can form a mutual consensus on various interests (Ramanathan,
2001).
2. Pre-Acquisition of AHP
AHP is based on some basic axioms (Vargas, 1990). These axioms are also crucial in the
process of applying real AHP.
Axiom Name of Process Description
1 Reciprocal
Comparison
A mutual comparison of two decision-makers must be
possible and should be able to indicate the degree of
importance. The degree of this importance must establish the
inverse condition. That implies that B would be 1/x times as
important as A given that A is x times important to B.
2 Homogeneity The degree of importance must be expressed through a set of
scales within a limited range. That is, there must be a
comparable range of criteria between the comparison objects.
3 Independence The same level of factors that assess relative importance
should not be related to each other in terms of characteristics
or content.
4 Expectation It is assumed that the hierarchical structure has a complete
structure that meets the rational expectations of decision
makers. That is, the hierarchy must contain all the
considerations that are considered in the decision. On the
other hand, since the number of levels is large and the
hierarchical structure becomes deeper, calculation complexity
is caused.
3. Process of AHP
AHP analysis is performed through the following procedure (Saaty, 1990).
Stage Description
1 Brainstorming Define the problem exactly and clarify the requirements of the problem.
2 Structuring It looks at all the factors related to the problem and constructs a
hierarchy that covers the highest level of the problem from the goal to
the mid-level evaluation item selection and placement to the lowest level
of comparison of the alternatives.
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