IJOPM
16,8
104
International Journal of Operations
& Production Management, Vol. 16
No. 8 1996, pp. 104-119. © MCB
University Press, 0144-3577
An analytical hierarchy process
framework for comparing the
overall performance of
manufacturing departments
Andrea Rangone
Politecnico di Milano, Milan, Italy
Introduction
In the last decade a growing number of authors have pointed out the crucial role
played by manufacturing in supporting the achievement of the overall business
strategy of a company[1-4]. This role has been often summarized in the concept
of manufacturing competitive priorities, that represent the deployment of the
business strategic objectives at the level of manufacturing. Many authors have
dealt with this concept, classifying competitive priorities into several
categories, such as quality, timeliness, flexibility and dependability[1,3,5].
Competitive priorities have to be explicitly considered in the design of a
manufacturing performance measurement system, aimed at monitoring the
correct implementation of the manufacturing strategy at all levels of the
manufacturing organizational structure. Hence, a manufacturing performance
measurement system should be able to assess the overall level of support that
each department provides to the achievement of the competitive priorities.
This result cannot be obtained through traditional approaches to
manufacturing performance measurement, based on costs schemes and
operating efficiency measures, since they do not fit the changing role of
manufacturing. For this reason many consultants, academics and professionals
have suggested integrating financial measures with non-financial indices[6-11].
The use of non-financial measures in performance measurement implies two
major problems:
(1) the selection of a proper set of measures capable of assessing and
controlling all critical factors, on the responsibility of a given manu-
facturing department, that act on the competitive priorities;
(2) the integration of those several measures, expressed in heterogeneous
units, into a single evaluation of the overall performance of a manufac-
turing department.
Financial support from the progetto strategico “CNR Gestione Strategica dell’ Innovazione” is
gratefully acknowledged.
While the first problem has been widely discussed in the literature[12-15], little An AHP
attention has been paid so far to the second problem, in spite of its important framework
implications for manufacturing managers and management accountants
(concerning, for instance, the design of effective evaluation and rewarding
systems). This shortage of the literature on manufacturing performance
measurement is especially critical in many current competitive environments,
where the manufacturing strategy is based on several competitive priorities 105
and, for each priority, on many performance objectives.
The construct of production competence, introduced by some authors[16,17]
to calculate the overall support provided by manufacturing to the business
strategy, can be considered an attempt to deal with the integration of
manufacturing performances and to address trade-offs among them. In fact this
construct is a theoretical framework that can be useful for a researcher to
investigate the linkages between manufacturing effectiveness and the overall
performance of a company[18,19], but it does not represent a pragmatic tool
capable of supporting manufacturing managers and management accountants
in structuring and integrating the several performance measures relevant to a
given manufacturing department.
The purpose of this article is to contribute to address this problem, by
showing the application of the analytic hierarchy process (AHP) to measuring
and comparing the overall performance of different manufacturing
departments on the basis of multi-attribute financial and non-financial
performance criteria.
This article does not report the detailed analytical description of the AHP,
widely discussed in literature, but focuses on the assumptions, limitations,
practical problems and managerial implications related to the application of the
AHP to measuring and comparing manufacturing performance.

The application of the AHP

The AHP is a multi-attribute decision tool that allows financial and non-
financial quantitative and qualitative measures to be considered and trade-offs
among them to be addressed. The AHP is aimed at integrating different
measures into a single overall score for ranking decision alternatives. Its main
characteristic is that it is based on pairwise comparison judgements[20]. The
AHP includes the following steps:
• Develop a hierarchical structure of the decision problem in terms of
overall objective, criteria, subcriteria and decision alternatives (see
Figure 1).
• Determine, on pairwise basis, the relative priorities of criteria and sub-
criteria that express their importance in relation to the element at the
higher level.
• Attribute, on pairwise basis, the suitability ratings of the decision
alternatives with respect to sub-criteria.
IJOPM • Calculate the overall ratings of the decision alternatives, weighting the
16,8 suitability ratings with the relative priorities of criteria and sub-criteria.
Recently the AHP has been applied to several and heterogeneous decision
problems, e.g. investments appraisal[21-23], projects selection[24], human
resources evaluation[25], vendor rating[26](several software packages are
available to implement AHP – see [27]). However, little attention has been given
106 so far to the application of the AHP to performance measurement[28], although
the AHP seems to be suitable also to compare the overall results of different
responsibility centres within a company when multi-attribute performance
criteria are used.

Overall objective
Criteria

Sub-criteria

Figure 1.
The hierarchical Decision
structure of a decision alternatives
problem

In particular, referring to manufacturing, the AHP can help managers to assess

and compare the overall support provided by each department to the
achievement of the manufacturing strategy, by linking the competitive
priorities to performance measures at every level of the manufacturing
organizational structure, and by addressing trade-offs among them.
In this section we will describe the main steps of the application of the AHP
to manufacturing performance assessment, comparing, as an example problem,
the overall performance of some factories of a multinational firm. Let us assume
that those factories produce the same products that are distributed and sold to
the same customers.

Developing the performance hierarchy

The first step of the AHP consists of developing a hierarchical structure of the
assessment problem. In the case of manufacturing performance measurement
the overall objective is the support provided by each factory to manufacturing
strategy; the criteria are the manufacturing competitive priorities; the
subcriteria are the operating measures included in the manufacturing
performance measurement system; the decision alternatives are the factories
that managers want to compare. The basic assumption of that hierarchical
structure is that the manufacturing departments are homogeneous in terms of
mission and performance measures on their responsibility.
 Furthermore, for an effective application of the AHP, it is important that the An AHP
hierarchical structure includes only criteria and subcriteria that are independent, framework
not redundant and additive. This does not depend only on a correct choice of
what factors have to be considered, but also on the specific competitive context.
There may be, for instance, some industries where doing extremely well in one
performance does not compensate for deficiencies in other performances[29]. In
those cases the AHP framework can still be applied, but it should be modified 107
using the feedback approach and supermatrix (e.g. see [30,31]).
Figure 2 shows the performance hierarchy for the example problem.
At the first level of the hierarchy there are the (three) manufacturing
competitive priorities of the company: quality, flexibility and environmental
compatibility.

Overall support to manufacturing strategy

Environmental
Quality Flexibility compatibility

Conformance Inspection Rationalization Product Volume Technology Solid Energy Factory green
rate costs degree flexibility flexibility flexibility waste consumption image

Figure 2.
The performance
A B C D hierarchy

At the second level there are operating measures that play an important role in
contributing to each competitive priority:
• conformance rate (percentage of products that meet the customer
requirements), inspection costs (expressed as a percentage of the
overall production costs) and a qualitative measure of the
rationalization degree of the operating procedures are the quality-
related measures;
• flexibility is measured by product flexibility and technology flexibility,
which are qualitative measures of the possibility to introduce at low
cost respectively new products and new operations, and by volume
flexibility, a qualitative index of the capability to make rapid volume
changes[32];
• environmental compatibility indexes are: solid waste (measured by the
ratio of tons of waste to production volume), energy consumption
(measured in fuel oil equivalent tons per product) and a qualitative
measure of the green image of the factory in relation to local people and
institutions[33].
IJOPM Finally, at the third level of the hierarchy, there are the four factories, referred to
16,8 as A, B, C and D, that must be assessed and compared.
The performance hierarchy described above highlights a typical problem of
many manufacturing performance measurement systems, that is the
heterogeneity of the measurement units of the indexes. In fact there are:
• financial measures: inspection costs;
108
• non-financial physical measures: conformance rate, solid waste, energy
consumption;
• non-financial qualitative measures (intangible): rationalization degree,
product, technology and volume flexibility, green image.
The heterogeneity of the measurement units makes it difficult to assess and compare
the overall level of support provided by the factories to manufacturing strategy.
The several software packages that implement the AHP present a friendly
interface that supports effectively managers in developing the performance
hierarchy. Such a step can play an important role in the assessment process,
since it allows a complex problem to be better understood by structuring it in an
organized form.

Determining the relative importance of competitive priorities and performance

measures
After developing the performance hierarchy, managers have to determine the
relative weights of manufacturing competitive priorities and, for each priority,
of the performance measures. With respect to competitive priorities the relative
weights assess their importance in providing support to the implementation of
the business strategy. As far as performance measures are concerned, the
relative weights express their importance in contributing to the corresponding
competitive priority.
To determine the relative weights managers are asked to make pairwise
comparisons using a preference scale, like the one shown in Table I[20]. For
instance, if quality is judged to be “very strongly more important” than
flexibility in supporting the business strategy, a score of 7 is given.

Verbal judgement Degree of preference

Equally preferred 1
Moderately preferred 3
Strongly preferred 5
Very strongly preferred 7
Table I.
Extremely preferred 9
A typical example of
measurement scale for Note:
the AHP Intermediate levels can be used to provide additional levels of discrimination
It is important to point out that a 1-9 preference scale can be used only if one An AHP
factor is up to nine times as important as another factor. If this does not occur, framework
managers have to choose a different preference scale, consistent with the
specific assessment problem.
The pairwise comparison data are organized in the form of a matrix and are
summarized on the basis of Saaty’s eigenvector procedure, in the absolute
priority weights that will be used to calculate the overall score of each factory. 109
The pairwise comparison data are translated into the absolute values by
solving the following matrix equation:
A * AW = k * AW
where:
A = the pairwise comparisons matrix;
AW = the vector of the absolute values;
k = the highest of the eigenvalues of the matrix A.
Tables II-V report the paired comparison data and the absolute weights of the
manufacturing competitive priorities and of the performance measures of the
example problem.
It should be noted that the quality of the output of the AHP, i.e. the calcula-
tion of the overall support of the factories to the manufacturing strategy, is
strictly related to the consistency of the pairwise comparison judgements given

Performance Environmental Absolute Table II.

category Quality Flexiblity compatibility weight The pairwise
comparison judgements
Quality 1 7 3 0.682 and the absolute weights
Flexibility 1/7 1 1/2 0.103 of the manufacturing
Environmental compatibility 1/3 2 1 0.215 competitive priorities

Conformance Inspection Rationalization Absolute

rate costs degree weight Table III.
The paired comparison
Conformance rate 1 7 3 0.669 data and the absolute
Inspection costs 1/7 1 1/3 0.088 weights of quality-
Rationalization degree 1/3 3 1 0.243 related measures

Product Technology Volume Absolute

flexibility flexibility flexibility weight Table IV.
The paired comparison
Product flexibility 1 5 5 0.455 data and the absolute
Technology flexibility –1/5 1 5 0.455 weights of flexibility-
Volume flexibility 1/5 1/5 1 0.090 related measures
IJOPM by managers[34]. Saaty[20] suggests a simple procedure for checking on
16,8 consistency[35].
The AHP allows the judgements of several people to be considered in the
assessment process. This is a critical issue, since determining the relative
importance of the competitive priorities and of the performance measures is
normally a collective process that may involve several managers and
110 management accountants.

Table V.
The paired comparison Solid Energy Green Absolute
data and the absolute waste conservation image weight
weights of
environmental Solid waste 1 5 3 0.648
compatibility-related Energy conservation 1/5 1 1/2 0.122
measures Green image 1/3 2 1 0.230

In order to consider in the AHP the judgements of several people, two different
approaches can be followed:
(1) to resort to a “facilitator”, i.e. a person who has the task to arrive at a
consensus on the judgements of the members;
(2) to aggregate the individual paired judgements on the basis of a
mathematical operator like, for instance, the geometric mean (see, for
instance, [36]).

Assessing performance measures

The same pairwise comparison procedure described in the previous paragraph
is used to assess the factories with respect to each performance measure. For
example, if with respect to product flexibility the performance of factory B is
judged to be “moderately better” than the performance of factory D, a rating of
3 is attributed. The pairwise data are translated into absolute ratings on the
basis of the Saaty’s eigenvector procedure. Such absolute ratings represent the
importance of the corresponding performance relative to achieving a
competitive priority. As a matter of fact the pairwise comparison procedure
should be used only for qualitative performances: rationalization degree,
product, technology and volume flexibility, green image (Tables VI-X).
With respect to quantitative performance measures, their values should be
used directly to calculate the absolute ratings, without resorting to the pairwise
comparison judgements. More precisely, referring to quantitative measures that
are directly proportional to desirability, the absolute ratings of the factories are
represented by the normalized vector of the data (Table XI), while for
performance measures that are inversely proportional to the desirability, it is
necessary to normalize the reciprocals of the data (Tables XII and XIII). It is
important to understand well the basic assumption of the normalizing procedure.
To this aim let us consider, for instance, the ratio of inspection costs to production
costs. Table XII reports that the absolute ratings relevant to factories A and D are
respectively 0.145 and 0.433, showing that it is approximately four times “better”
to have a ratio of 0.8 per cent (factory D) versus 2.4 per cent (factory A) inspection An AHP
costs to production costs. Hence, the normalizing procedure assumes that the framework
importance of a performance relative to achieving a competitive priority is
proportional to its numeric values.
When that assumption is not true, since the functional relationship between
a given performance measure and its level of support to a competitive priority
is different from direct or inverse proportionality, the normalizing procedure 111

Absolute
Factory A B C D rating
Table VI.
A 1 4 6 1/3 0.287 The pairwise
comparison judgements
B 1/4 1 2 1/5 0.069
and the absolute ratings
C 1/6 1/2 1 1/8 0.079 of the factories’
D 3 5 8 1 0.565 rationalization degree

Absolute
Factory A B C D rating
Table VII.
A 1 1/3 1/5 1 0.099 The pairwise comparison
judgements and the
B 3 1 1/2 3 0.284
absolute ratings of the
C 5 2 1 5 0.518 factories’ product
D 1 1/3 1/5 1 0.099 flexibility

Absolute
Factory A B C D rating
Table VIII.
A 1 1/2 1/4 2 0.169 The pairwise comparison
B 2 1 1/2 1 0.445 judgements and the
C 4 2 1 2 0.445 absolute ratings of the
factories’ technology
D 1/2 1 1/2 1 0.163 flexibility

Absolute
Factory A B C D rating
Table IX.
A 1 1/4 2 1/3 0.118 The pairwise comparison
B 4 1 8 1 0.441 judgements and the
absolute ratings of the
C 1/2 1/8 1 1/6 0.059 factories’ volume
D 3 1 6 1 0.382 flexibility
IJOPM cannot be followed and, thus, we have to resort to the comparison procedure for
16,8 quantitative performance measures. This situation is frequent in many
manufacturing environments because of, for instance, the saturation effect or
the critical hurdle effect.
In the first case, it is not true that improving a given performance measure
implies a proportional increase of the level of support to manufacturing
112 strategy, since performance above a certain level is not particularly appreciated
by customers.

Absolute
Factory A B C D rating

Table X. A 1 1/5 2 1/3 0.105

The pairwise comparison
B 5 1 9 2 0.538
judgements and the
absolute ratings of the C 1/2 1/9 1 1/6 0.054
factories’ green image D 3 1/2 6 1 0.303

Factory Conformance rate (%) Absolute rating

A 82 0.245
Table XI. B 90 0.269
Translating the
conformance rates into C 78 0.233
absolute ratings D 85 0.253

Inspection costs/ Absolute

Factory production costs (%) Reciprocal rating

A 2.4 41.7 0.145

Table XII.
B 1.5 66.7 0.231
Translating inspection
costs into absolute C 1.8 55 0.191
ratings D 0.8 125 0.433

Energy consumption Absolute

Factory (FOET per product) Reciprocal rating

A 1 10-2 100 0.125

Table XIII.
B 0.5 10-2 200 0.250
Translating energy
consumption into C 0.286 10-2 350 0.4375
absolute ratings D 0.67 10-2 159 0.1875
Figure 3 shows an example of performance measure that is characterized by the An AHP
saturation effect. framework
With regard to the critical hurdle effect, the phenomenon is the opposite: for
the performance values that are below a critical hurdle, the level of support to
manufacturing strategy is very low, while for higher values the level of support
grows more than proportionally. Figure 4 reports the example of a performance
measure that presents the critical hurdle effect. 113
Hence, when there are quantitative performance measures that are character-
ized by these effects[37], it is not possible to calculate their absolute ratings
directly on the basis of the quantitative data, but it is necessary to resort to the
pairwise comparison procedure. Using the measurement scale of Table I, for
instance, managers can translate these effects into adequate paired comparison
assessments.
Figure 5, on the basis of the comparison judgements reported in Table XIV,
shows the non-linear relationship between the factories’ solid wastes (Table XV)
and the level of contribution to the achievement of the competitive priority
concerning environmental compatibility. This graph shows that it is
approximately four times “better” to have a ratio of 40 10–4 versus 80 10–4 solid
waste to production volume.
The comparison procedure should be followed also when the retrieval of the
quantitative data is particularly difficult. In fact, even though theoretically for
financial and non-financial physical measures the quantitative data should be
available, it could not be worth using them if the process of data retrieval is too
expensive compared to the benefits induced by the knowledge of these data on

Level of support to
competitive priority

Figure 3.
An example of
saturation effect
Performance values

Level of support to
competitive priority

Figure 4.
An example of critical
hurdle effect
Performance values
IJOPM the quality of the assessment. In that case quantitative performances should
16,8 also be treated as qualitative, calculating their absolute ratings on the basis of
the paired comparison procedure.

Level of support to competitive priority

0.45
114 0.4
0.35
0.3
0.25
Figure 5. 0.2
The relationship 0.15
between solid wastes 0.1
and the level of support 0.05
to manufacturing 0
strategy 15 40 80 115
Solid wastes (10– 4 tons per unit)

Absolute
Factory A B C D rating

Table XIV. A 1 1/9 1/3 1/9 0.44

The pairwise comparison B 9 1 4 1.2 0.441
judgements and the
absolute ratings of the C 3 1/4 1 1/4 0.113
factories’ solid waste D 9 1/1.2 4 1 0.402

Factory A B C D
Table XV.
The solid waste of Solid waste (tons)/
the factories production volume 115 10–4 15 10–4 80 10–4 40 10–4

For instance, referring to the example problem, the green image of a factory in
relation to the local community could be measured in quantitative terms
through a survey, based on a questionnaire, among a sample of people and
institutions of the area. But the cost and time required by this quantitative
measurement would be too much in relation to the cost of a less precise, but
effective, qualitative measure of the image of the factory, based on some
qualitative data – for instance, interviews and articles published in the local
newspapers and reviews, or number of complaints.

Calculating the overall support of the factories to manufacturing strategy

Weighting the absolute ratings with the absolute priority weights of
performance measures, managers can calculate the overall ratings of the
factories with respect to each competitive priority (Tables XVI, XVII and An AHP
XVIII). Averaging these values with the absolute weights of the competitive framework
priorities, it is possible to determine the overall support provided by each
factory to the achievement of the manufacturing strategy. On the basis of this
score, the four factories are ranked (Table XIX).
A phenomenon that a manager using the AHP has to consider is “rank
reversal”, i.e. the change in the rank of the decision alternatives when one is 115
added or deleted. Rank reversals occur because of the relative measurements
required by the AHP. A large debate there has been about the legitimacy of rank
reversal[38-40]. With regard to performance assessment and comparison, rank
reversal is not particularly critical, because the set of manufacturing
departments to be compared does not change, at least within a control cycle.
However, if the set changes, rank reversal could be considered, in our opinion,
legitimate, since for most performance measures there are no prior standards
against which to assess the manufacturing departments’ performances and,
thus, their measurement depends on what departments are considered.

Managerial implications
The AHP is a flexible tool, as it can be applied to any hierarchy of performance
measures, whatever the number of levels, of manufacturing departments and of
performance measures there may be. However there are some assumptions that
have to be carefully considered before applying the AHP to performance

Factory A B C D Table XVI.

The ratings of the
Quality rating 0.247 0.217 0.192 0.344 factories’ quality

Factory A B C D Table XVII.

The ratings of the
Flexibility rating 0.144 0.350 0.303 0.233 factories’ flexibility

Table XVIII.
Factory A B C D The ratings of the
factories’ evironmental
Environmental compatibility rating 0.068 0.440 0.192 0.335 compatibility

Factory A B C D
Table XIX.
The overall ratings and
Overall rating 0.194 0.279 0.192 0.335
the corresponding
Rank 4 2 3 1 rank of the factories
IJOPM assessment. Such assumptions, if disregarded, can mislead managers about this
16,8 technique. Hence, before pointing out the major managerial implications of the
AHP, its most critical assumptions, already pointed out in the previous section,
are here summarized[41]:
• the manufacturing departments that are to be compared should be
116 homogeneous in terms of manufacturing competitive priorities and set of
performance measures on their responsibility;
• competitive priorities and performance measures should be
independent, not redundant and additive;
• the pairwise comparisons made by managers have to be fairly
consistent;
• the 1-9 preference scale allows the relative importance of competitive
priorities and performance measures to be expressed well.
On those assumptions the benefits of the application of the AHP to performance
measurement goes beyond the establishment of a rank among different
manufacturing departments. In fact the AHP framework allows the
information of a given rank to be increased, by giving in output also partial
calculations, such as the absolute ratings of the factories with respect to each
competitive priority, and by performing a sensitivity analysis to investigate the
stability of the rank, when there are changes, for instance, in the priority
weights of the manufacturing competitive priorities.
Also when the fit between the assumptions of the AHP and the reality is
inadequate, the AHP can support managers and management accounters, by
structuring a complex problem in an organized form, linking together
competitive priorities, performance measures and manufacturing
departments. Hence in those cases, the contribution of the AHP is in providing
a structure for the problem, rather than in providing optimal or even good
solutions.
The above considerations show that the use of the AHP can improve the
main objectives of a performance measurement system, that is, integration,
control, motivation and decision making.
With regard to integration, the AHP can:
• Encourage discussion among managers about the manufacturing
competitive priorities and performance measures, facilitating managers
to reach agreement on those that are critical for the company.
• Help managers to communicate the manufacturing competitive
priorities and the relative importance of performance measures to all
levels of the organizational str ucture of manufacturing, by
translating managers’ subjective judgements into quantitative terms.
This ensures a congr uence between individual actions and
manufacturing strategy.
As far as control is concerned, the AHP, by formally and systematically An AHP
considering all performance measures on the responsibility of a given framework
manufacturing department, makes it possible to:
• standardize and organize the control procedure, avoiding their
dependence on subjective and implicit judgements of managers and
management accountants;
117
• understand better the overall support of each department to manufactur-
ing strategy – and, thus, ultimately to the achievement of the overall
business strategy – by addressing trade-offs among different perfor-
mance measures (or competitive priorities).
As a consequence, the AHP may lead to the design of more effective systems of
people evaluation and reward.
With respect to motivation, the AHP makes the control mechanism more
transparent to department managers and employees by showing precisely all
performance measures against which they are evaluated. This drives people to
focus their attention on all manufacturing priorities and, for each priority, on
performances that contribute to its achievement. In particular, since the AHP
also takes into account qualitive measures, people are induced to consider
intangible performances, which are usually disregarded by performance
measurement systems. Furthermore, the AHP can encourage competition
among departments and cells.
Finally, the AHP can support the decision making of department managers
by indicating, for instance, priorities for operating improvement programmes,
supporting resources allocation, guiding the investments in technologies,
plants, equipment, etc.
In this article the AHP framework has been applied to assess and compare
the overall performance of several departments within the same company.
However, the same framework can also be used to benchmark manufacturing
performances against major competitors, by comparing manufacturing
departments of different companies. In that case a critical problem is the
difficulty in retrieving quantitative data relevant to competitors’ performances:
the problem can be addressed by the AHP, since it can deal with qualitative
measures.

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26. Mohanty, R.P. and Deshmukh, S.G., “Use of analytic hierarchy process for evaluating An AHP
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Vol. 23 No. 3, 1993, pp. 22-8. framework
27. Buede, D.M., “Software review: three packages for AHP: Criterium, Expert Choice and
HIPRE3+”, Journal of Multi-Criteria Decision Analysis, No. 1, 1992, pp. 119-21.
28. Chan, Y.L. and Lynn, B.E., “Organisational effectiveness and competitive analysis: an
analytic framework”, Advances in Management Accounting, Vol. 2, pp. 85-108.
29. Meredith, J.R., McCutcheon, D.M. and Hartley, J., “Enhancing competitiveness through the 119
new market value equation”, International Journal of Production Research, Vol. 14 No. 11,
1994, pp. 7-22.
30. Harker, P.T. and Vargas, L.G., “Reply to ‘Remarks on the analytic hierarchy process’ by J.S.
Dyer”, Management Science, Vol. 36 No. 3, 1990, pp. 269-73.
31. Saaty, T.L., Decision Making for Leaders, RWS Publications, Pittsburgh, PA, 1988.
32. Azzone, G. and Bertelè, U., “Measuring the economic effectiveness of flexible automation:
a new model”, International Journal of Production Research, Vol. 27 No. 5, 1989,
pp. 735-46.
33. The performance hierarchy of the example problem is characterized by an equal number
of performance measures for each competitive priority. However, the AHP can be applied
also when this hypothesis is not true. More precisely, when the performance hierarchy
presents an unequal number of operating measures related to the different competitive
priorities, the attribution of the relative importance of performance measures should
consider also the number of operating measures, to provide equal influence (see for
instance [31]).
34. In technical terms consistency means that the cardinal transitivity among comparisons
has to be preserved: for instance if priority “A” is three times more important than
competitive priority “B” and the latter is three times more important than competitive
priority “C”, hence “A” should be nine times more important than competitive priority “C”.
35. The procedure requires calculating the “inconsistency index”, that is, the difference
between the largest eigenvalue and the number of elements of the matrix, divided by the
number of elements minus one. The largest eigenvalue of a matrix of perfectly consistent
comparisons equals the number of elements. The higher the eigenvalue is, compared to the
number of elements, the more inconsistent the pairwise comparisons are. By dividing the
inconsistency index by a similar index based on randomly chosen pairwise comparisons,
the “inconsistency ratio” is obtained: Saaty suggests that acceptable values for this ratio
should not exceed 0.1.
36. Acze, J. and Saaty, T.L., “Procedures for synthesising ratio judgements”, Journal of
Mathematical Psychology, Vol. 27, 1983, pp. 93-102.
37. It should be noted that some manufacturing performances can be characterized by both
the effects: for low values a critical hurdle effect may occur, while for high values there may
be a saturation effect.
38. Boucher, T.O. and MacStravic, E.L., “Multi-attribute evaluation within a present value
framework and its relation to the analytic hierarchy process”, The Engineering Economist,
Vol. 37 No. 1, 1991, pp. 1-29.
39. Schenkerman, S., “Avoiding rank reversal in AHP decision-support models”, European
Journal of Operational Research, Vol. 74, 1994, pp. 407-19.
40. Vargas, L.G., “Reply to Schenkerman’s avoiding rank reversal in AHP decision support
models”, European Journal of Operational Research, Vol. 74, 1994, pp. 420-25.
41. Some of these assumptions can be overcome, using adequate procedures. For instance, in
the previous section a procedure for checking and increasing consistency, and an approach
capable of dealing with factors that are not independent and additive (feedback and
supermatrix) have been reported.
 Conference announcement

The European Conference on Intelligent

Management Systems in Operations
25-26 March 1997, University of Salford, UK
Co-sponsored by The UK Operational Research Society and the
European Operations Management Association

Operations management poses a number of problems of significant complexity whose solution

would lead to more effective operations and bring significant economic benefits. Their solution, how-
ever, requires novel approaches that are based on techniques and principles from both Operational
Research and Artificial Intelligence.
This conference, to be held at Salford University, Greater Manchester, aims to bring together
researchers and practitioners working on the challenging problems in operations management that
are at the OR-AI interface. Researchers and practitioners from industry and academia are invited to
submit papers in all areas related to aspects of design, development, testing and implementation of
intelligent management systems in manufacturing and service operations covering but not restricted
to:

• Process design and control • Scheduling and capacity planning

• Maintenance and fault diagnosis • Inventory management
• Information management in operations • Quality management and control
• Workforce training and management • Supply chain management

Organizing committee:
Dr K.A.H. Kobbacy, Salford University (Chair)
Mr N. Proudlove, UMIST
Dr S. Vadera, Salford University
Chris Barrett, Operational Research Society

Scientific committee:
Mr H. Beck, University of Edinburgh
Professor A.H. Christer, Salford University
Professor R.H. Hollier, UMIST
Dr K. Kautz, Norwegian Computer Centre, Norway
Dr K.A.H. Kobbacy, Salford University
Dr E. Plaza, Universitat Autonoma de Barcelona, Spain
Dr Sam Steel, University of Essex
Professor H. Oesterle, University of St Gallen, Switzerland
Dr S. Vadera, Salford University
Professor C.A. Voss, London Business School

Submission to: Dr K. Kobbacy, Department of Computer & Mathematical Sciences,

The University of Salford, Salford M5 4WT. Tel: +44-(0)161-745 5000; Ext. 3785;
Fax: +44-(0)161-745 5559; E-mail: K.A.H.Kobbacy@MCS.salford.ac.uk.

General enquiries: Chris Barrett at O R Society,

Tel: +44-(0)121 233 9300; E-mail: barrett@orsoc.org.uk