Analytical Hierarchy Process (AHP): A Multi-Objective Decision Making Technique

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Analytical Hierarchy Process (AHP) A
Multi-Objective Decision Making Technique

• Jason Chen, Ph.D.
• Professor of MIS
• School of Business
• Gonzaga University
• Spokane, WA 99258
• chen_at_gonzaga.edu

http//www.cs.adfa.oz.au/teaching/studinfo/da2/lec
tures/L14html/sld001.htm
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Analytical Hierarchy Process

• In many situations one may not be able to assign
  weights to the different decision factors.
  Therefore one must rely on a technique that will
  allow the estimation of the weights.
• What is a solution?
• One such process, The Analytical Hierarchy
  Process (AHP), involves pairwise comparisons
  between the various factors.

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Analytical Hierarchy Process (cont.)

• The process is started by the decision maker
  creating the value tree associated with the
  problem.
• The proceed by carrying out pairwise comparisons,
  both between
• Alternatives on each factor, and
• Factors at a given node.

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Application Case of AHP

• Jane is about to graduate from college and is
  trying to determine which job offer to accept.
  She plans to choose between three offers by
  determining how well each offer meets the
  following criteria (objectives)
• High starting salary
• Quality of life in city where job is located
• Interest of work
• Nearness of job to family

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Assumptions

• Jane has hard time in prioritizing those
  criteria. In other words, she needs to find one
  way to decide the weights for those criteria.
  AHP provides such a function.

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Determine the problem

• What job offer will give Jane possibly highest
  satisfaction?
• Structure the hierarchy by putting the top
  objective (satisfaction with job), criteria, and
  alternatives as follows.

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Structure of the Problem
Job A
Job B
Job C
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Structure of the Problem
Job A
Job B
Job C
Web site http//www.hipre.hut.fi/
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The Principle of the AHP

• The principle of the AHP relies on the pairwise
  comparison. This comparison is carried out using
  a scale from 1 to 9 as follows
• 1 Equally preferred
• 2 Equally to Moderately preferred
• 3 Moderately preferred
• 4 Moderately to Strongly preferred
• 5 Strongly preferred
• 6 Strongly to Very Strongly preferred
• 7 Very Strongly preferred
• 8 Very to Extremely Strongly preferred
• 9 Extremely preferred

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A pairwise comparison matrix for the criteria
level
Web site http//www.hipre.hut.fi/
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Using the same steps of 3 and 4 to determine the
score of each alternative on each criterion.
Take the first criterion Salary as an example.
One pairwise matrix is constructed as follows
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Result from double clicking salary
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Result from double clicking life quality
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Result from double clicking interest
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Result from double clicking nearness to family
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Result from Analysis of Composite Priorities
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Result from Analysis of Composite Priorities
with Values
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Result as Text
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Your Turn -- Try It!

• Http//www.hipre.hut.fi

File name mbus633.jmd (BiEMBA.jmd)
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Edit the elements Name
Select this
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Steps of creating Links
Left click
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Steps of creating Links (cont.)
Complete the remaining links
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Steps of creating Links (cont.)
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Steps of assigning weights to different decision
factors

• Goal level (satisfaction with job)
• Criteria level (salary, life quality, interest,
  and nearness to family)

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Steps of assigning weights to different decision
factors
Double left click
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Steps of assigning weights to different decision
factors (cont.)
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Steps of assigning weights to different decision
factors (cont.)
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Steps of assigning weights to different decision
factors (cont.)
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Steps of assigning weights to different decision
factors (cont.)
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Steps of assigning weights to different decision
factors (cont.)
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Steps of assigning weights to different decision
factors (cont.)
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Steps of assigning weights to different decision
factors (cont.)
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Steps of assigning weights to different decision
factors (cont.)
Double left click
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Steps of assigning weights to different decision
factors (cont.)
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Steps of assigning weights to different decision
factors (cont.)
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Perform Analysis
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Perform Analysis (cont.)
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Perform Analysis (cont.)
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Perform Analysis (cont.)
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Save your work
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Have a fun!

• Http//www.hipre.hut.fi

File name mbus633.jmd (BiEMBA.jmd)