Analytic Hierarchy Process (AHP)

Carin Labuschagne carin.labuschagne@up.ac.za

modelling complex problems in a simple & natural way -Wasil & Golden
-Editorial:

Computers & Operations Research

Agenda
Background AHP Theory Example Applications in Industry & Project Management

Background
Tomas L. Saaty Operations Manager Early 1970s Department of Defence & the National Science Foundation USA Multi-Criteria, multi-alternative decision making problems with one or more decision makers

Background
Criteria (Objects) Quantitative/Qualitative Simplicity centered on only comparing 2 objects at a time. Need not know exact relationship between objects Decision-Makers use knowledge, experience, personal & organisational values.

AHP Theory: Saatys 7 Steps

1. 2.

3.

4.

Define the problem & determine the goal Construct the hierarchy from the top through the intermediate levels to the lowest level (lowest level is normally alternatives) Construct a set of Pair-wise comparison matrices (size n x n) There are n(n 1) judgments required to develop the set of matrices in step 3.

AHP Theory: Saatys 7 Steps

5.

6.

7.

Hierarchical synthesis is now used to solve to eigenvector problem to get the priority vector (weight/score). Consistency is determined by using the eigenvalue, max, to calculate the consistency index, CI as follows: CI = (max n)/(n -1) , where n is the matrix size. Verify CR ( CI/RI). Consistency is right if CR < 10% Steps 3 to 6 are performed for all levels.

Example
Step 1: Define the problem & determine the goal:
Problem: To Choose a security complex to buy/build a home in. Goal: Selecting the best/most suitable security complex.

Example
Step 2: Construct the hierarchy
Factors to consider:
Location
Distance to N1 Distance to schools Distance to shopping centrums

Architectural Styles Security - mechanisms Financial Implications

Price Ranges Building Requirements ( e.g. have to start building within 6 months) Rules with regard to preferred service providers

Ground Type - D3,D2, D1 Cost of Living

Monthly Levies Municipal Area rates of water and electricity, taxes

Value added services e.g. datalines, schools, Ernie Els Gholfcourse,

Example
Selecting the best security complex

Location

Building Considerations

Security

Costs

Value Adds

Architectural Styles

Type of Ground

Building Costs

Living Costs

Example
Selecting the best security complex

Location

Building Considerations

Security

Costs

Value Adds

Architectural Styles

Type of Ground

Building Costs

Living Costs

Example
Weights for Criteria Step 3: Construct Pair-wise Comparison Matrix
Location Location Building Considerations Security Costs Value Adds Building Considerations Security Costs Value Adds

Example
Weights for Criteria Step 4: There are n(n 1) judgments required to develop the set of matrices in step 3. Pair-wise Comparison Scale

Pair-wise Comparison Scale

Numerical Rating 9 8 7 6 5 4 3 2 1 Verbal Judgments of preferences Extremely preferred Very strongly to extremely Very strongly preferred Strongly to very strongly Strongly preferred Moderate to strongly Moderately preferred Equally to moderately Equally preferred

Step 4:
Location Building Considerations Security Costs Value Adds Location Building Considerations

1 1/3 2 2 1/5

3 1 6 6 1/2

1/2 1/6 1 1 1/9

1/2 1/6 1 1 1/9

5 2 9 9 1

Security Costs Value Adds

Step 5: Hierarchical synthesis is now used to solve to eigenvector problem to get the priority vector (weight/score).

Wayne Winston Approach Simplified Approach

Step 1: Divide each entry in column i of A by the sum of the entries in column i. This yields a new matrix Anorm
Step 2: Estimate wi as the average of the entries in Row i of Anorm.

Step 5.1
1 3 1 6 6 1/6 1 1 1/9 1/6 1 1 1/9 5 2 9 9 1

A=

1/3 2 2 1/5

5.53 16.5 2.78

0.18 0.18 0.18 0.06 0.06 0.06

2.78
0.18 0.06 0.36 0.36 0.04

26
0.19 0.07 0.35 0.35 0.04

Anorm =

0.36 0.36 0.36 0.36 0.36 0.36 0.04 0.04 0.04

Step 5.2
W W W W W
location

building

security

costs

value

= (0.18+0.18+0.18+0.18+0.19)/5 = 0.182 = (0.06+0.06+0.06+0.06+0.07)/5 = 0.062 = (0.36+0.36+0.36+0.36+0.35)/5 = 0.358 = (0.36+0.36+0.36+0.36+0.35)/5 = 0.358 = (0.04+0.04+0.04+0.04+0.04)/5 = 0.04

Step 6: Consistency
Step 1: AwT Step 2: 1 i = n

ientryinAw T n i =1 ientryinwT

Step 3: CI = (Step 2 result n) / (n-1) Step 4: CR = CI/RI

Step 6.1
1 3 1 6 6 1/6 1 1 1/9 1/6 1 1 1/9 5 2 9 9 1 0.182 0.062 0.358 0.358 0.04

AwT =

1/3 2 2 1/5

0.926

AwT =

0.322 1.812 1.812 0.187

Step 6.2
0.182 0.926

wT

0.062 0.358 0.358 0.04

AwT =

0.322 1.812 1.812 0.187

Step 2 result

1 0.926 0.322 1.812 1.812 0.187 + + + + 5 0.182 0.062 0.358 0.358 0.04

= 5.016

Step 6.3
CI = (5.016 -5) /(5-1) = 0.004 = CI/RI = 0.004/1.12 = 0.0035 < 0.1

CR

Example
Selecting the best security complex

0.182
Location

0.062
Building Considerations

0.358
Security

0.358
Costs

0.04
Value Adds

Architectural Styles

Type of Ground

Building Costs

Living Costs

Example
Scores for Location Step 3: Construct Pair-wise Comparison Matrix
A A B C B C

Example
Scores for Location Step 4: There are n(n 1) judgments required to develop the set of matrices in step 3. Pair-wise Comparison Scale

Pair-wise Comparison Scale

Numerical Rating 9 8 7 6 5 4 3 2 1 Verbal Judgments of preferences Extremely preferred Very strongly to extremely Very strongly preferred Strongly to very strongly Strongly preferred Moderate to strongly Moderately preferred Equally to moderately Equally preferred

Step 4:

1 1/9 1/5

9 1 1/3

5 3 1

Step 5: Hierarchical synthesis is now used to solve to eigenvector problem to get the priority vector (weight/score).

Wayne Winston Approach Simplified Approach

Step 1: Divide each entry in column i of A by the sum of the entries in column i. This yields a new matrix Anorm
Step 2: Estimate wi as the average of the entries in Row i of Anorm.

Step 5.1
1 9 1 1/3 5 3 1

A=

1/9 1/5

1.31 10.3

0.76 0.87 0.56

Anorm =

0.09 0.10 0.33 0.15 0.03 0.11

Step 5.2
W W W
A

= (0.76+0.87+0.56)/3 = 0.73 = (0.09+0.10+0.33)/3 = 0.17 = (0.15+0.03+0.11)/3 = 0.10

Step 6: Consistency
Step 1: AwT Step 2: 1 i = n

ientryinAw T n i =1 ientryinwT

Step 3: CI = (Step 2 result n) / (n-1) Step 4: CR = CI/RI

Step 6.1
1 9 1 1/3 5 3 1 0.73 0.17 0.10

AwT

1/9 1/5

AwT

2.760 0.551 0.303

Step 6.2
0.73 2.760

wT

0.17 0.10

AwT =

0.551 0.303

Step 2 result

1 2.760 0.551 0.303 + + 3 0.73 0.17 0.1

= 3.35

Step 6.3
CI = (3.35 -3) /(3-1) = 0.17 = CI/RI = 0.17/0.58 = 0.29 > 0.1 - inconsistent

CR

Step 4:

1 1/9 1/5

9 1 1/3

5 3 1

Example
0.182
Location

0.062
Building Considerations

Selecting the best security complex

0.358
Security

0.358
Costs

0.04
Value Adds

Example
0.182
Location

0.062
Building Considerations 0.10 0.45

0.358
Security

0.358
Costs

0.04
Value Adds

A B

0.60 0.10

0.2 0.7

0.15 0.63

0.4 0.05

0.30

0.45

0.1

0.22

0.55

Example
A = (0.182*0.6) + (0.062*0.1)+(0.358+0.2) + (0.358*0.15) +(0.04*0.4) = 0.2567 B = (0.182*0.1) + (0.062*0.45)+(0.358+0.7) + (0.358*0.63) +(0.04*0.05) = 0.5242 C = (0.182*0.3) + (0.062*0.45)+(0.358+0.1) + (0.358*0.22) +(0.04*0.55) = 0.2191

Software
Expert Choice Logical Decisions ERGO Tess EXCEL Excel Example 2

Other interesting facts

Criticized for lack of firm theoretical basis Wide use proof it is a usable decision making tool. Group decision-making software is available to facilitate comparison process. Designed for a maximum of 10 objects New development using robust regression instead of eigenvectors

Applications in Industry & Project Management

Strategy Formulation Quality Control Prediction of Voting Behaviour Resource Allocation Public Policy Forecasting MPM/MEM
Landcare projects Maintenance Planning