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

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
[email protected]
http://www.cs.adfa.oz.au/teaching/studinfo/da2/lectures/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):
–
–
–
–
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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
Satisfaction with a Job
Starting Salary
Job A
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Life Quality
Job B
Interest
Nearness to
Family
Job C
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Structure of the Problem
Satisfaction with a Job
Starting Salary
Job A
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Life Quality
Job B
Web site:
http://www.hipre.hut.fi/
Interest
Nearness to
Family
Job C
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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
Satisfaction
with a Job
Salary Quality
Interest
Nearness
Salary
1
5
2
4
Quality
1/ 5
1
1/ 2
1/ 2
Interest
1/ 2
2
1
2
Nearness
1/ 4
2
1/ 2
1
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:
SALARY
Job A
A1 
Job B
Job C
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Job A Job B Job C
1
2
4
1/ 2
1
2
1/ 4
1/ 2
1
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double
click
click
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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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click
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Result from “Analysis of Composite Priorities … “
click
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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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Double click
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Edit the element’s Name
Select this
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Steps of creating “Links”
Left click
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Steps of creating “Links” (cont.)
Right click
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)
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