4 Business Application Using AHP

4 Business Application Using AHP - ANALYTIC HIERARCHY...

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1 ANALYTIC HIERARCHY PROCESS
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2 DO YOUR DECISION CONFERENCES TURN OUT LIKE THIS ? WE WANT PROGRAM A !! TOO BAD! WE WANT PROGRAM B !! OR DOES THIS HAPPEN? COME ON IN THE WATER IS FINE! SEA OF INDECISION
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3 BUT BOSS. .. THAT WAS MY BEST GUESS! GUESS AGAIN DO YOUR RECOMMENDATIONS TURN OUT LIKE THIS? MAYBE YOU NEED A NEW APPROACH
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4 I THINK I ‘LL TRY THE ANALYTIC HIERARCHY PROCESS (AHP) !!!
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5 OKAY TELL US ABOUT AHP DR THOMAS L. SAATY DEVELOPED THE PROCESS IN THE EARLY 1970’S AND. ..
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6 THE PROCESS HAS BEEN USED TO ASSIST NUMEROUS CORPORATE AND GOVERNMENT DECISION MAKERS. THE INFORMATION IS THEN SYNTHESIZED TO DETERMINE RELATIVE RANKINGS OF ALTERNATIVES INFORMATION IS DECOMPOSED INTO A HIERARCHY OF CRITERIA AND ALTERNATIVES BOTH QUALITATIVE AND QUANTITATIVE CRITERIA CAN BE COMPARED USING INFORMED JUDGMENTS TO DERIVE WEIGHTS AND PRIORITIES
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7 Goal Choose the Best Location Cost Exchange Labor Proximity Proximity Proximity to Rate Productivity to Market to Suppliers Competitors Location A Location C Location B
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8 Location Selection C ER LP PM PS PC Cost 1 4 3 1 3 4 .32 Exchange Rate 1/4 1 7 3 1/5 1 .14 Labor Productivity 1/3 1/7 1 1/5 1/5 1/6 .03 Proximity to Market 1 1/3 5 1 1 1/3 .13 Proximity to Supplier 1/3 5 5 1 1 3 .24 Proximity to Competitors 1/4 1 6 3 1/3 1 .14 Weights
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9 Comparison of Locations with Respect to the Six Characteristics C A B C Priorities A 1 1/3 1/2 .16 B 3 1 3 .59 C 2 1/3 1 .25 ER A B C Priorities A 1 1 1 .33 B 1 1 1 .33 C 1 1 1 .33 LP A B C Priorities A 1 5 1 .45 B 1/5 1 1/5 .09 C 1 5 1 .46 PM A B C Priorities A 1 9 7 .77 B 1/9 1 1/5 .05 C 1/7 5 1 .17 PS A B C Priorities A 1 1/2 1 .25 B 2 1 2 .50 C 1 1/2 1 .25 PC A B C Priorities A 1 6 4 .69 B 1/6 1 1/3 .09 C 1/4 3 1 .22
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10 Composition and Synthesis Impacts of Location on Criteria Composite Impact of Schools A B C .32 .14 .03 .13 .24 .14 C ER LP PM PS PC .16 .33 .45 .77 .25 .69 .37 .59 .33 .09 .05 .50 .09 .38 .25 .33 .46 .17 .25 .22 .25
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11 Which Drink is Consumed More in the U.S.? Coffee Wine Tea Beer Sodas Milk Water Drink Consumption in the U.S. Coffee Wine Tea Beer Sodas Milk Water 1 9 1 5 1/3 1 2 1/9 1/3 1 1 1/9 1/4 1/2 1 1 1/9 1/3 1 2 1 1/2 1/9 1/9 1/3 1/2 1/3 1 The derived scale based on the judgments in the matrix is: Coffee Wine Tea Beer Sodas Milk Water .177 .019 .042 .116 .190 .129 .327 with a consistency ratio of .022. The actual consumption (from statistical sources) is: .180 .010 .040 .120 .180 .140 .330
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12 Estimating which Food has more Protein A B C D E F G Food Consumption in the U.S. A: Steak B: Potatoes C: Apples D: Soybean E: Whole Wheat Bread F: Tasty Cake G: Fish 1 9 1 9 1 1 6 1/2 1/3 1 4 1/4 1/3 1/2 1 5 1/3 1/5 1 3 1 1 1/4 1/9 1/6 1/3 1/5 1 The resulting derived scale and the actual values are shown below: Steak Potatoes Apples Soybean W. Bread T. Cake Fish Derived .345 .031 .030 .065 .124 .078 .328 Actual .370 .040 .000 .070 .110 .090 .320 (Derived scale has a consistency ratio of .028.)
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13 Absolute Measurement In absolute measurement the properties of an element are
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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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4 Business Application Using AHP - ANALYTIC HIERARCHY...

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