Multicriteria

Decision Making
Analytical Hierarchy Processes

Overview of AHP
GP answers how much?, whereas AHP answers
which one?
AHP developed by Saati
Method for ranking decision alternatives and
selecting the best one when the decision maker
has multiple objectives, or criteria

Examples
Buying a house
Cost, proximity of schools, trees, nationhood, public
transportation

Buying a car
Price, interior comfort, mpg, appearance, etc.

Going to a college

Demonstrating AHP
Technique

Identified three potential location

alternatives: A,B, and C
Identified four criteria: Market,
Infrastructure, Income level, and
Transportation,
1st level: Goal (select the best location)
2nd level: How each of the 4 criteria
contributes to achieving objective
3rd level: How each of the locations
contributes to each of the 4 criteria

General Mathematical
Process
Establish preferences at each of the levels

Determine our preferences for each location for each

criteria
A might have a better infrastructure over the other two

Determine our preferences for the criteria

which one is the most important

Combine these two sets of preferences to

mathematically derive a score for each location

Pairwise Comparisons
Preference Level

Used to score each

alternative on a
criterion
Compare two
alternatives
according to a
criterion and indicate
the preference using
a preference scale
Standard scale used
in AHP

Numerical
Value

Equally preferred

Equally to moderately
preferred

Moderately preferred

Moderately to strongly
preferred

Strongly preferred

Strongly to very strongly

preferred

Very strongly preferred

Very strongly to extremely

preferred

Extremely preferred

Pairwise Comparison
If A is compared with
B for a criterion and
preference value is 3,
then the preference
value of comparing B
with A is 1/3
Pairwise comparison
ratings for the market
criterion
Any location
compared to itself,
must equally preferred

Market
location

1/3

1/5

1/2

Other Pairwise Comparison

Market

Income level

location

location

1/3

1/3

1/5

1/6

1/9

1/2

Infrastructure

Transportation

location

location

1/3

1/3

1/2

1/7

1/4

Developing Preferences within

Criteria
Prioritize the decision
Market

alternatives within each

criterion
Referred to synthesization

Sum the values in each

column of the pairwise
comparison matrices
Divide each value in a column
by its corresponding column
sum to normalize preference
values

location

1/3

1/5

1/2

11/6

16/5

Market
location

6/11

3/9

5/8

2/11

1/9

1/16

3/11

5/9

5/16

Values in each column sum to

1

Average the values in each

row

Provides the most

preferred alternative (A, C,
B)
Last column is called
preference vector

Market
location

Average

0.5455

0.333

0.6250

0.5012

0.1818

0.1111

0.0625

0.1185

0.2727

0.5556

0.3125

0.3803

Other Preference Vectors

Location

Market

Income Level

Infrastructure Transportation

0.5012

0.2819

0.1780

0.1561

0.1185

0.0598

0.6850

0.6196

0.3803

0.6583

0.1360

0.2243

Ranking the Criteria

infrastructure

Transportation

Accomplished the
same way we ranked
the locations within
each criterion, using
pairwise comparison

Market

1/5

Income

Income

which one is the most

important and which one
is the least important
one

Criteria

Market

Determine the relative

importance or weight
of the criteria

infrastructure

1/3 1/9

Transportation

1/4 1/7 1/2

Normalizing
Average

Transportation

Infrastructure

Income

Market

Criteria

Market

0.1519

0.1375

0.2222

0.2857

0.1993

Income

0.7595

0.6878

0.6667

0.5000

0.6535

Infrastructure

0.0506

0.0764

0.0741

0.1429

0.0860

Transportation

0.0380

0.0983

0.0370

0.0714

0.0612

Income level is the highest priority criterion followed by market

0.5012

0.2819

0.1780

0.1561

0.1185

0.0598

0.6850

0.6196

0.3803

0.6583

0.1360

0.2243

Overall Score A= (0.1993)(0.5012)+(0.6535)(0.2819)+

(0.1780)(0.0860)+(0.1561)(0.0612)
=0.3091
Overall Score B =0.1595
Overall Score C =0.5314

Criteria

Average

Transportation

Infrastructure

Market

Location

Income Level

Developing Overall
Ranking

Market

0.1993

Income

0.6535

Infrastructure

0.0860

Transportation

0.0612

Preference Vector

Summary
Develop a pairwise comparison matrix for
each decision alternative for each criterion
Synthesization
Sum values in each column
Divide each value in each column by the
corresponding column sum
Average the values in each row (provides preference
vector for decision alternatives)
Combine the preference vectors

Develop the preference vector for criteria in

the same way
Compute an overall score for each decision
alternative
Rank the decision alternatives

AHP Consistency
Decision maker uses pairwise comparison to
establish the preferences using the preference scale
In case of many comparisons, the decision maker
may lose track of previous responses
Responses have to be valid and consistent from a
set of comparisons to another set
Suppose for a criterion
A is very strongly preferred to B and A is moderately
preferred to C
C is equally preferred to B
Not consistent with the previous comparisons

Consistency Index (CI) measures the degree of

inconsistency in the pairwise comparisons

CI Computation
Pairwise Comparison Matrix
infrastructure

Transportation

1/5

.1993

Income

.6535

infrastructure

1/3

1/9

Transportation

1/4

1/7

1/2

Income

Market

Criteria

Market

Consider the pairwise

comparisons for the 4
criteria
Multiply the Pairwise
Comparison Matrix by the
Preference Vector
Divide each value by the
corresponding weights from
the preference vector
If the decision maker was a
perfectly consistent decision
maker, then each of these
ratios would be exactly 4
CI=(4.1564-n)/(n-1), where
n is the number of being
compared

(1)(0.1993)+ (1/5)(0.6535)++(4)(0.0612)=0.8328
(5)(0.1993)+ (1)(0.6535)++(9)(0.0612)=2.8524
(1/3)(0.1993)+ (1/9)(0.6535)++(2)(0.0612)=0.3474
(1/4)(0.1993)+ (1/7)(0.6535)++(1)(0.0612)=0.2473
0.8328/0.1993=4.1786
2.8524/06535=4.3648
0.3474/.0760=4.0401
0.2473/0.0612=4.0422
Ave
=4.1564

Preference
Vector

.0860
.0612

Degree of Consistency
n

10

1.51

1.45

1.41

1.32

1.24

1.12

0.90

0.58

RI

CI=(4.1564-4)/(4-1)=0.0521
If CI=0, there would a
perfectly consistent decision
maker
Determine the inconsistency
degree
Determined by comparing CI
to a Random Index (RI)
RI values depend on n
Degree of consistency =CI/RI
IF CI/RI <0.1, the degree of
consistency is acceptable
Otherwise AHP is not
meaningful
CI/RI=0.0521/0.90=0.0580<0.
1

Scoring Model
Similar to AHP, but mathematically simpler
Decision criteria are weighted in terms of
their relative importance
Each decision alternative is graded in
terms of how well it satisfies the criteria
using Si=gijwj, where
Wj=a weight between 0 and 1.00 assigned to
criterion j indicating its relative importance
gij=a grade between 0 and 100 indicating how
well the decision alternative i satisfies criterion j
Si=the total score for decision alternative i

Example
Decision Alternatives
Decision Criteria

Weight

Alt.1

Alt.2

Alt.3

Alt.4

Criterion 1

0.30

40

60

90

60

Criterion 2

0.25

75

80

65

90

Criterion 3

0.25

60

90

79

85

Criterion 4

0.10

90

100

80

90

Criterion 5

0.10

80

30

50

70

Weight assigned to each criterion indicates its relative importance

Grades assigned to each alternative indicate how well it satisfies each criterion
(0.3)(40)+ (0.25)(75)++(0.10)(80)=62.75
Si=gijwj= (0.3)(60)+ (0.25)(80)++(0.10)(30)=73.50
(0.3)(90)+ (0.25)(65)++(0.10)(50)=76.00
(0.3)(60)+ (0.25)(90)++(0.10)(70)=77.75

Example
II-Gear Action

Purchasing a mountain bike

Three criteria: price, gear
action, weight/durability
Three types of bikes: A,B,C
Developed pairwise
comparison matrices I,II,III
Ranked the decision criteria
based on the pairwise
comparison
Select the best bike using
AHP

Bike

1/3

1/7

1/4

III-Weight/Durability

I-Price

Bike

1/3

1/2

Criteria

Price

Gear

Weight

Price

Bike

1/3

Gear

1/3

1/6

Weight

1/5

1/2