Analytical group’s evaluation. The computations made by

Analytical Hierarchy process (AHP)

Analytical hierarchy process is a
multi criteria decision making process developed by Thomas L Saaty in late
1970’s in which factors are arranged in hierarchic structure. AHP is an
effective tool for dealing with complex decision making and hence aid the
decision maker to set priorities and make the best decision. This method
includes the selection of the best alternatives out of many alternatives
available based on the multiple criteria’s for selection. This method comprises
of assigning weights or priorities to each of the criteria’s, sub criteria’s
and the alternatives on the basis of those criteria’s. These weights can be
assigned based on the actual measurements like cost, price, weights etc or on
the basis of expert’s evaluation or group’s evaluation. The computations made
by the AHP are always guided by the decision maker’s experience, ideas,
feelings and emotions. Thus AHP can be considered as a tool which is able to
translate the both qualitative and quantitative evaluations made by the
decision maker into a multicriteria ranking of alternatives. In addition, the
AHP is simple because there is no need of building a complex expert system with
the decision maker’s knowledge embedded in it. AHP also allows a small amount
of inconsistency in judgment because human is not always consistent. Typical
applications where AHP has been used are in:

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·        
Prioritizing factors and requirements that
impact development and productivity,

·        
Choosing among several strategies available

·        
Estimating cost and scheduling options for
material requirements planning

·        
Selecting desired components from several vendors, 

·        
Evaluating the quality of research or investment
proposals

 

AHP implementation process

Thomas L Saaty gave us four basic
steps for making a decision in an organized way which is listed as below:-

·        
Define the problem and determine the kind of
knowledge sought.

·        
Structure the decision hierarchy from the top
with the goal of the decision, then the objectives from a broad perspective, through
the intermediate levels (criteria on which subsequent elements depend) to the
lowest level (which usually is a set of the alternatives).

·        
Construct a set of pair wise comparison
matrices. Each element in an upper level is used to compare the elements in the
level immediately below with respect to it.

·        
Obtain local and the respective global weights and
rank the alternatives according to the global weights

 

Step-1:- Construction of
decision Hierarchy

The construction of decision hierarchy
is of utmost importance as it reduces the complexity of the decision process. Decision
hierarchy is generally broken down into three stages:- the goal, the criteria’s
and the alternatives.

Goal:- The goal of
the problem is the objective that drives the decision problem. The goal has to
be speci?c which can be properly examined by the decision makers. Also the goal
should be singular. That is, the decision-makers must not attempt to satisfy multiple
goals within one problem.

Criteria:- The
criteria of a decision problem are the factors that are used to evaluate the
alternatives with regard to the goal. Each alternative will be judged based on
these predetermined criteria, and their effectiveness on meeting the goal is
measured. We can go further to create sub-criteria, when more di?erentiation is
required.

Alternatives:- The
alternatives are the di?erent options that are being weighed in the decision.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intensity of Importance

Definition

Explanation

1

Equal Importance

Two activities contribute equally
to the objective

2

Weak or slight

 

3

Moderate importance

Experience and judgment slightly
favor one activity over another

4

Moderate plus

 

5

Strong importance

Experience and judgment strongly
favor one activity over another

6

Strong plus

 

7

Very strong or demonstrated
importance

An activity is favored very
strongly over another; its dominance demonstrated in practice

8

Very, very strong

 

9

Extreme importance

 The evidence favoring one activity over
another is of the highest possible order of affirmation

Reciprocals of above

If activity i has one of the above
non-zero numbers assigned to it when compared with activity j,then j has the
reciprocal value when compared with i

A reasonable assumption

1.1-1.9

If the activities are very
close

May be difficult to assign the best
value but
when compared with other contrasting activities
the size of the small numbers would not be too
noticeable, yet they can still indicate the
relative importance of the activities.