1 AHP Lecture Notes

1 AHP Lecture Notes - Analytic Hierarchy Process The...

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  1              Slide 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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  2              Slide Analytic Hierarchy Process Step 1: List the Overall Goal, Criteria, and Decision Alternatives Step 2: Develop a Pairwise Comparison Matrix Rate the relative importance between each pair of decision alternatives. The matrix lists the alternatives horizontally and vertically and has the numerical ratings comparing the horizontal (first) alternative with the vertical (second) alternative. Ratings are given as follows: . . . continued For each criterion, perform steps 2 through 5
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  3              Slide Analytic Hierarchy Process Step 2: Pairwise Comparison Matrix (continued) Compared to the second alternative, the first alternative is: Numerical rating extremely preferred 9 very strongly preferred 7 strongly preferred 5 moderately preferred 3 equally preferred 1 Intermediate numeric ratings of 8, 6, 4, 2 can be assigned. A reciprocal rating (i.e. 1/9, 1/8, etc.) is assigned when the second alternative is preferred to the first. The value of 1 is always assigned when comparing an alternative with itself.
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  4              Slide Analytic Hierarchy Process Step 3: Develop a Normalized Matrix Divide each number in a column of the pairwise comparison matrix by its column sum. Step 4: Develop the Priority Vector Average each row of the normalized matrix. These row averages form the priority vector of alternative preferences with respect to the particular criterion. The values in this vector sum to 1.
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  5              Slide Analytic Hierarchy Process Step 5: Calculate a Consistency Ratio The consistency of the subjective input in the pairwise comparison matrix can be measured by calculating a consistency ratio. A consistency ratio of less than .1 is good. For ratios which are greater than .1, the subjective input should be re- evaluated. Step 6: Develop a Priority Matrix After steps 2 through 5 has been performed for all criteria, the results of step 4 are summarized in a priority matrix by listing the decision alternatives horizontally and the criteria vertically. The column entries are the priority vectors for each criterion.
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This note was uploaded on 10/22/2009 for the course BUSQOM 1070 taught by Professor Shang during the Fall '09 term at Pittsburgh.

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1 AHP Lecture Notes - Analytic Hierarchy Process The...

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