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CHAPTER 1

INTRODUCTION

Decision making is an integral activity of life. Decisions can be drawn from choices which may only involve intuition or from a complex chain of choices which may involve a rigorous investigation (Acker, 2008; Böhm and Brun; 2008). In most cases, it is not easy for humans to decide because the process of making decisions requires integration of various, possibly conflicting, factors (Monat, 2009). Decisions may be made under a variety of situations, depending on the ability of the decision maker to gather pertinent information or resources (Taha, 2003). For one, decisions may be made under certainty, when all factors are stipulated and analyzed with precision. Decisions may also be made under risk, when there are existing information and resources, but are not fully acquired. Lastly, there may be situations which call for decisions made under uncertainty. In our dynamic setting, the decision maker should not be left empty-handed, but rather should be equipped with the tools appropriate to address a specific situation. Operations research holds decision making as one of its core areas (Triantaphyllou et al, 1998). With decisions taking qualitative and quantitative forms, numerous tools for decision making exist. There is no best tool in decision making differing nature of scenarios call for different tools (Krantz and Kunreuther, 2007; Saaty,

2008).

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When decisions are made under certainty, the information and resources are already determined. A decision maker is presented with courses of action which offer possible solutions. He is then to take the challenge of applying the necessary tools to come up with the best (or nearly best) solution (or solutions). Multi-Criteria Decision Making (MCDM) dwells on problems of these type, and mathematical tools and concepts for analysis may be used (Monat, 2009; Triantaphyllou et al, 1998). When MCDM problems present possible solutions which are discrete in form, the MCDM falls under a Multi-Attribute Decision Making Problem (MADM), as opposed to its continuous counterpart, the Multi-Objective Decision Making (MODM). Linear Algebra serves as a backbone to most commonly used MADM tools (Kolman and Hill, 2001; Triantaphyllou, 1998). Currently, Analytic Hierarchy Process (AHP) is increasing in popularity as an MADM tool (Saaty, 2008). Although Linear Algebra, specifically the use of matrices, are well-established tools in MADM, different approaches may also be applied. The dynamic nature of the decision making process opens up the possibilities of using differential equations to solve them. Differential equations are closely related to the study of change, and hence, may be applied to observe how decisions change when preferences of the decision maker vary. This study aims to incorporate differential equations in the decision making process. Models on differential equations may serve as an alternative tool providing a new perspective in looking at the decisions. More effective techniques may be constructed may be constructed, adding to the pool of available tools in decision making to address real-world problems.

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1.1

Objectives

The study aimed to construct a new approach in decision making that involves

pairwise comparison of choices. Specifically, it aimed:

• 1. To formulate a quantitative decision making technique using ordinary differential equations (ODE) as an alternative to AHP;

• 2. To analyze the constructed ODE models by finding their solutions, wither numerically or analytically; and

• 3. To interpret the solutions and relate them to the process of determining the priority ranks of the choices.

• 1.2 Significance of the Study

The use of differential equations as an alternative to the Analytic Hierarchy Process (AHP) may aid in observing the dynamics of the interaction between the different preferences of the decision maker. Parameter estimation may also be performed on ordinary differential equations. Moreover, some concepts on ordinary differential equations have a counterpart on AHP, such as the existence of Fuzzy AHP and Fuzzy ODEs.

• 1.3 Scope and Limitations

In this study, the choices and parameter values are specified by the decision maker, that is, the decision is made under certainty. Also, the models created are only applicable to situations where pairwise comparisons between choices is necessary. Moreover, the decision criteria are assumed to be contained under a single hierarchy.

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1.4 Time and Place of Study

The study was conducted during the first semester of Academic Year 2010-2011

at the Mathematics Division, Institute of Mathematical Sciences and Physics, University of the Philippines Los Baños, Laguna.

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CHAPTER 2

REVIEW OF RELATED LITERATURE

Currently, there are various tools that a decision maker can use to evaluate choices. Cognition plays an important role; the rules of logic and rationality are often applied in making decisions. On the other hand, emotions are also needed, at times when decisions are executed on the basis of individual preferences (Böhm and Brun, 2008; Västfjäll, Peters and Slovic, 2008). People may rely on facts, unverified information, and even intuition based on experiences when making decisions. The process of decision making started off as a simple daily task that need not require the complicated tools we have at the present. Accelerated by advancements in various facets of everyday living, decision making has been transformed into a process that requires thinking and deeper understanding on the part of the decision maker (Taha, 2003). These decision makers then discovered more efficient and effective tools for decision making, and also found broader applications such as those in industry, medicine, education, science and technology, military, and in other fields (Saaty, 2008). Operations research, with decision making as one of its vital aspects, continues to come up with more, if not better, tools for decision making. Since decision making is incorporated into many fields, the need to come up with a credible and sound decision is of high priority. Mathematics now provides decision making with a logical background that is necessary to establish credibility when making decisions.

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However, even with the inclusion of a heavy mathematical background, decision making is still subject to the personal biases of the decision maker. Saaty (2008) stressed the subjectivity of any decision making process from the identification of the problem, to the choice of tool (or tools) to be used, even up to their interpretations. With this, the existence of a best decision making tool is highly unlikely. There can only be tools best suited for a certain class of problems, and thus the decision makers should always be equipped with the knowledge on various tools. Multi-Attribute Decision Making (MADM) is a class of decision making problems where a finite number of alternatives exist. There are differences among the tools used to solve them, but similar concepts exist such as the concept of alternatives and goals. The following are some of the used tools in MADM (Triantaphyllou et al, 1998). Weighted Sum Model (WSM). This model is governed by the additive utility assumption, where the alternatives are ranked based on the sums of their utility. The numerical values assigned to each alternative is computed as the sum of the pairwise products of the weights of every decision criteria with its corresponding value under that criteria. This determines the priority ranks of each alternative. However, this assumption is most effective when applied to a single dimension, or to dimensionless alternatives. For example, cost and distance cannot be added directly to each other, and thus makes it difficult to make judgments on multiple dimensions using this model. Weighted Product Model (WPM). Sometimes called as dimensionless analysis, this model makes use of relative values instead of absolute ones. The structure of this model eliminates any possible units of measurement, hence making it an effective tool for decision making on multiple dimensions.

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Analytic Hierarchy Process (AHP). This model decomposes a particular decision making problem by performing pairwise comparisons among the alternatives under every decision criterion. After obtaining relative specific values on these comparison matrices, a method similar to the WSM is applied, also with the same interpretations. The values used in AHP, however, are relative ones, so this applies both to single and multiple dimensions. This model however, should not use identical alternatives, as these will cause logical contradictions on the results. Moreover, some researches have pointed out logical contradictions even when non-identical alternatives are used. AHP was subjected to changes, and a new process was developed, the Revised AHP.

ELECTRE Method. The name of the method is a French acronym, whose English translation is Elimination and Choice Translating Reality. This method, as mentioned by Triantaphyllou et al, is a method of outranking relations. Pairwise comparisons are also performed on the alternatives, but unlike in AHP, ELECTRE considers all the decision criteria simultaneously when making comparisons. An alternative outranks another one when it is more or equally preferred than another alternative in all the decision criteria. This method also has its advantages and disadvantages. This method normalizes the data, making them applicable to analysis with multiple dimensions. Also, this method is efficient when making analysis of a large number of alternatives and relatively few decision criteria, since it is easier to eliminate less favorable alternatives. However, since the resulting matrix is incomplete, i.e., some entries do not have any value, it only

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produces a set of leading alternatives. This method is also modified, and the revised method is termed as ELECTRE II.

Technique for Order Preference by Similarity to Ideal Solution (TOPSIS).

This method was proposed as an alternative to the ELECTRE method. In this method, two solutions are generated: the ideal solution and the negative-ideal solution. The more preferred alternative is the one which has the shortest and farthest Euclidian distances from the ideal and negative-ideal solutions, respectively. Being an alternative approach to ELECTRE, the norm is also used to normalize the data, making the analysis applicable to multiple dimensions as well. Even with the presence of a variety of tool, there are other factors to be considered in decision making. Various studies have cited contradictions on the notion that knowing more is better (Gaissmaier, Schooler and Mata, 2008, Saaty, 2008). In some cases of decision making, having too much information produces the same results as having too little information. Decision makers may be tempted to attack a problem at a larger scale because of the perceived knowledge that they have. Hence there is still a need for decision makers to develop more tools, or to revise existing tools in the light of the dynamic setting that we live in.

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CHAPTER 3

ANALYTIC HIERARCHY PROCESS

In this chapter, Analytic Hierarchy Process (AHP), a tool for decision making under certainty, is explained in detail. The advantages and disadvantages of this method is discussed. An illustration of AHP is presented at the end of the chapter. Analytic Hierarchy Process falls under Multi-Attribute Decision Making (MADM), a type of decision making where the decision space is discrete, that is, the possible choices for a particular decision are finite (Saaty, 2008; Taha, 2003; Triantaphyllou, 1998). An example of a decision making problem with a discrete decision space is to choose a prime number less than 20 with the smallest sum of positive divisors,

where the decision space is

. The result obtained after applying AHP is a priority ranking (in decreasing order) of the elements of the decision space, and thus the decision maker may base his decisions on the ranked data.

3.1 Determining the Ranking of Decision Alternatives The possible choices for a decision are called decision alternatives. In AHP, pairwise comparisons are made among decision alternatives , where is a natural nu,ber. The pairwise comparisons result in an comparison matrix . For a

particular decision criterion, the associated entries

represent the importance of

decision alternative relative to decision alternative . The comparison matrix associated with

a decision criterion is formulated as follows:

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where

After obtaining an

comparison matrix, the entries are normalized by dividing each

entry by the respective column totals. The desired relative weights

are now equal to

the average of all the entries in each row,

where the relative weight corresponds to decision alternative for a decision criterion . In AHP, various decision criteria may also exist, and the decision maker assigns composite weights to each of the decision criteria. Given decision criteria

in

a

given

decision

making

problem,

the

decision

maker

assigns

composite weights which represents the relative importance of each criteria compared to the other criteria. Every composite weight is normalized such that:

Performing AHP requires at least one decision criterion, and different comparison matrices are generated for every decision criterion. Figure 3.1.1 shows the

flow of calculations based from the computed relative weights and a single decision

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criterion. Figure 3.1.2 shows a generalized flow of calculations for alternatives, given decision criteria.

decision Figure 3.1.1 Flow of AHP Calculations with 1 Decision Criterion Figure 3.1.2 Flow of AHP Computations with

Decision Criteria

Based from the

decision criteria, the decision alternatives are ranked utilizing

the composite weights, where the weight of each decision alternative is computed as:

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3.2 Illustrations on AHP

Consider this situation involving AHP with two hierarchies. A company is in need of a warehouse to store their newly purchased machineries. The operations manager is tasked to choose the most appropriate location in terms of total incurred cost and distance from the production site, with the cost four times as important as the distance. He is aware that there are three possible sites for the warehouse, say Locations A, B, and C. Furthermore, he hired two consultants, Consultants X and Y, for this purpose. The reputations of the two stipulated that he trusts the judgment of Consultant X thrice as likely as he would trust that of Consultant Y. If the consultants performed pairwise comparisons among the three locations, based from their subjective preferences on the two given criteria (cost and distance), and presented all the performed calculations for the operations manager to evaluate, which location might the operations manager choose? Solution. First, we state all the variables to be used. There are three decision alternatives for the location, which we denote as . Initially, there are two decision criteria to be considered, which will be used by both consultants in the evaluation of their decisions, and we denote these criteria as , corresponding to the criteria on cost and distance, respectively.

As mentioned in the problem, the total incurred cost is four times more important than the distance , a ratio equal to . After normalizing the ratio, the obtained composite weights are equal to . These evaluations are made by the consultants, and the operations manager further evaluates the two consultants based on their reputations. With a similar computation, the composite weights are

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assigned to consultants X and Y, where

. It is evident that there

exist two hierarchies of judgement present in the problem, the lower hierarchy involving the decision criteria for the total incurred cost and distance from the site, and the higher hierarchy involving the decision criteria for the consultants. Figure 3.2.1 shows the flow of calculations for this problem using AHP. Figure 3.2.1 Flow of Calculations for the Illustration

It is to be noted that the consultants performed the pairwise comparisons themselves. For consultant X, the comparison matrices associated with cost and distance are and , respectively. Likewise, the associated comparison matrices for consultant Y are and . Let us look first at the comparison matrix of consultant X with total incurred cost as the decision criterion. The matrix is already assumed to have values equal to

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The entries represent the degree of preference between two decision alternatives.

Take for example the 1 st row, 2 nd column

of comparison matrix

. The value of 2

means that location A is twice as preferred as location B in terms of total incurred cost, based from the subjective judgment of consultant X. Moreover, the 2 nd row, 1 st column entry , has a reciprocal value . Every pair of entries and in any comparison matrix have reciprocal values. In addition, every main diagonal entry has a value of 1, since every decision alternative is compared against itself in these entries. After the comparison matrix is constructed, the entries are normalized by dividing each by their respective column totals. Consider the first column of comparison matrix , whose total is equal to . The entries in the first column are divided by , resulting

in a column of as follows:

. The normalized comparison matrix of

, denoted by

is

The desired relative weights are computed based on the normalized comparison matrices. The relative weight for a decision alternative , under the decision criterion is the average of each row in the comparison matrix. The three relative weights for locations A, B and C, with total incurred cost as the decision criterion, is as follows:

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For the three cases, the same process is applied. The comparison matrices by the two consultants are as follows:

The corresponding normalized matrices are computed, and are shown below. Table 3.2.1 shows the different values obtained from the computations.

15 Table 3.2.1 A Summary of the Relative and Composite Weights in the Illustration

 Consultant X Consultant Y Decision Total Incurred Distance from Total Incurred Distance from Alternative Cost Site Cost Site Location A Location B Location C

These relative weights will help the decision maker in his decision. His decision however, is affected by the composite weights assigned to the different decision criteria. For locations A, B, and C, the relative weights are to be multiplied by their respective composite weights based on the lower hierarchy decision criteria, cost and distance. After which, the relative weights will again be multiplied by the composite weights for the higher hierarchy decision criteria, the two consultants. For Consultant X, the first set of computations is made for the lower hierarchy, and are as shown below:

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For Consultant Y, the same process is applied, and the relative weights obtained

 are: , , and . After the consultants determined the relative weights of each location independently, the operations manager himself applies composite weights to data gathered by each consultant. Based from the performed calculations using AHP, the ranking of the three

decision alternatives are:

location A.

. Hence, the operations manager should choose

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CHAPTER 4

MODEL 1

In this chapter, the derivation of Model 1 is discussed. A sample model formulation will also be shown, as well as the qualitative interpretations of the solution of the system of ordinary differential equations.

4.1 Model Formulation

Differential equations may be used to represent various quantities (Rainville, Bedient, Bedient, 2002). In this model, the differential equations represent rates of change in some quantities. Since the decision making problem involves a discrete decision space, we define a set to be the set representing the choices for a certain decision criteria. These variables have values, which is similar in Analytic Hierarchy Process (AHP), where the calculations result in the final numerical values corresponding to each choice. For this model, we assign equal initial values to the variables . These in turn may increase or decrease as time progresses. The favorability of each variable may be proportional to their rate of change, since differential equations may also represent rates. Since the bases for the differential equations come from the comparison matrix used in AHP, the interpretation for each entry still holds. The entry corresponds to the comparison between choices and , specifically the degree of preference of one decision over the other. An increase in the value of one variable should merit an increase

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in another variable, and we believe that the increase is proportional in nature. The rate of change in alternative depends on alternative , with the rate of proportionality interpreted as the strength of preference. This is rate of proportionality is equal to . The rate of change in the value of a choice is dependent on the other choices . Performing pairwise comparisons of alternative against the other alternatives, the rate of change is modeled using a weighted product model. That is, we are assuming that pairwise comparison is multiplicative so that the distances between the values associated to the choices are emphasized. Hence, the given system is as follows:

The system was used to model some conceptual scenarios. Upon solving the system numerically with Runge-Kutta 4, it is observed that the values of change rapidly within a short period of time. To maintain nonnegative values all throughout the system, initial values for this model are restricted to nonnegative real numbers. Also, to avoid loss of precision due to memory capacity of the programs used, a limit was provided for the decision values, depending on the memory capacity of the software used. Notice that if a choice is more preferred than a choice , the values of the entry is greater than one. Since the entries determine the rate of increase in the variables, a more preferred decision increases at a faster rate. Hence, the most preferred alternative is seen as the variable with the highest value obtained after a period of time.

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4.2 Illustration of Model 1

Consider the comparison matrix

from the illustration presented in Section 3.2.

The decision making problem is concerned with choosing the best warehouse site among three possible locations A, B and C. The comparison matrix is as follows:

The

decision

space

consists

of

three

variables

,

corresponding to three choices. From the model, the system of equation is as follows:

Simplifying the given system above, we obtain the system of ordinary differential equations:

Solving the given systems of ordinary differential equations with Berkeley Madonna, we obtain the solution as shown in Figure 4.2.1. The method for numerical approximation used was Runge Kutta 4, with a time step of 0.1, and a time interval of .

20 Figure 4.2.1 Numerical Solution for Model 1 Illustration Using Berkeley Madonna

Note that the range is adjusted to be able to show the values of each variable, since one of the variables have taken a relatively high value compared to the other

variables. The final values of each variable are as follows:

Since, A reached the limit at an earlier time, we conclude that

,

and

.

.

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CHAPTER 5

MODEL 2

In this chapter, the derivation of Model 2 is discussed. A sample model formulation is shown, as well as the qualitative interpretations of the solution to the system of ordinary differential equations.

5.1 Model Formulation

One of the disadvantages of Analytic Hierarchy Process is the occurrence of

inconsistencies on the comparisons made by the user. Inconsistencies may occur because of three possible reasons:

• a. Decision makers, such as humans, do not make perfectly uniform decisions;

• b. Not all decision making problems possess choices that can be arranged in a hierarchical manner; and

• c. Some scenarios force decision makers to make inconsistent decisions.

Similar to the previous model, this also involves a discrete decision space. Thus we define a set to be the set representing the choices for a certain decision criteria. We also assign equal initial values to the variables . In this model, the choices are assumed to have a pulling effect on one another. The increase in the value of one variable has a corresponding decrease in the value of the other variables. In game theory, this is viewed as an -person zero-sum game, wherein the increase in the value of a variable has a corresponding decrease of the same value in other variables.

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First,

to

incorporate the pulling effect

to

the

choices,

a transformation is

performed to the comparison matrix . The new matrix is obtained from the

comparison matrix

by using the function

now transformation, the sum of all the entries in the comparison matrix is equal to 0. The range of the entries in the comparison matrix changes from (in ) to (in ). The system of ordinary differential equations that can be formulated from this revised comparison matrix is as follows:

.

The

modified

entries

have

entries

such

that

With

this

Upon solving the system numerically with Runge-Kutta 4, it is observed that the values of have wave-like solutions similar to trigonometric functions. If a choice is more preferred than a choice , the value of the entry is positive. The higher the value of the entry, the more preferred a choice is compared to other choices. The variables started with equal initial values, say . There came a time when the variables had equal values equal to . This interval determined the preferences among the choices. Hence, the most preferred alternative is seen as the variable that has the highest value in the said interval. These concepts are discussed in detail in Chapter 7.

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5.2 Illustration of Model 2

Consider the same comparison matrix

from the illustration in Model 1. The

decision making problem is concerned with choosing the best warehouse site among three possible locations A, B and C. The comparison matrix is as follows:

space corresponding to three choices. We first perform the transformation on the comparison

,

The

decision

consists

of

three

variables

matrix. We obtain , where

From the model, the system of ordinary differential equations is as follows:

Simplifying the system above, we obtain the following:

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Solving the systems of ordinary differential equations with Berkeley Madonna, we obtain the solution as shown in Figure 5.2.1. The method for numerical approximation

used was Runge Kutta 4, with initial values

, a time step of 0.02. Figure 5.2.1 Numerical Solution for Model 2 Illustration Using Berkeley Madonna

At time

, the three variables attained equal values of . This

interval is enclosed in a dashed box for emphasis. Observing this interval, we see that variable has the highest function value, followed by B, and then C. Thus the preference for the three choices are . The variables have the following relative maximum

on

the

specified

interval:

. approximately equal to

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CHAPTER 6

MODEL 3

In this chapter, the derivation of Model 3 is discussed. A sample model formulation will also be shown, as well as the qualitative interpretations of the solution of the system of ordinary differential equations.

6.1 Model Formulation

Similar to the previous two models, we also define a set whose variables correspond to the decision alternatives. This model is formulated based on the hypothesis that there exists an interaction among all the decision alternatives in any decision making process, whether directly or indirectly (Easley and Kleinberg, 2010). In evolutionary game theory, the concept of sequential games is introduced (Beckstead, 2008; Easley and Kleinberg, 2010; Hillier and Lieberman, 2001). These prevail in many forms, and such activities may be games repeated over a period of time: competition among capitalist firms over a span of years, or even evolution up to the molecular level in the battle for survival. In general, these are events which call for decisions made one after the other, either made consciously, as in the case of capitalists, or unconsciously, as in the case of organisms. It is important to note that all of these possess a common goal, and that is for the benefit of an individual or a group, and may or may not include the decision maker. We assume that a decision alternative affects every other alternative at some point in time, and that this continues for some span of time. Conversely, a decision alternative

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is affected by all the other decision alternatives. If we denote them as nodes, and the effect that every decision alternative have on each other as a directed edge, we can represent this relationship as a network, as shown in Figure 6.1.1. Figure 6.1.1 Network Diagram: Directed Complete Graph with

Nodes

Furthermore, the directed edges possess weights, which are interpreted as the favorability of an alternative compared to another, and these are the entries contained in the comparison matrix, say for an alternative compared to alternative . The directed network of alternatives with weights is as shown in Figure 6.1.2. Figure 6.1.2 Network Diagram: Directed Complete Graph with

Nodes, with Weights

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We then formulate the model with these procedures:

• a. Since the change in the value of variable , denoted by , is affected by the values of the other variables, we initially model the system similar to that of the second model, that is:

for some function

.

• b. Choose one variable , corresponding to decision alternative 1, as our primary reference node. Consider the effect the other variables have on . The preference in decision alternative 1 is affected by the remaining decision alternatives , and with corresponding weights, as seen in Figure 6.1.3. If we view these in the concept of evolutionary games, this is a single generation, with every node having an effect on each other (Hillier and Lieberman, 2001). Figure 6.1.3 Network Diagram with Primary Reference Node

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• c. Furthermore, among the remaining decision alternatives , we may repeat the process and take another variable, say , and observe the effects that the remaining decision alternatives have on decision alternative 2, now with variable as a secondary reference node. We may view this procedure as the second generation of alternatives interacting with each other. With a secondary node considered, the effects of the alternatives among themselves are based on two iterations, or two successive generations. We believe that this process may be performed multiple times, up to times, or up to generations. However, for this model, we limit only until the second iteration. Figures 6.1.4 up to 6.1.7 show the network diagrams. The orange nodes represent the secondary reference nodes considered for every diagram, while the yellow nodes represent the nodes affected by the secondary reference nodes. Figure 6.1.4 Network Diagram with Secondary Reference Node

29 Figure 6.1.5 Network Diagram with Secondary Reference Node Figure 6.1.6 Network Diagram with Secondary Reference Node Figure 6.1.7 Network Diagram with Secondary Reference Node

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• d. The function

is defined by looking up to the second iteration. To obtain

, or to measure the effect of a variable

to

, we first find the total

contribution of all the other variables to variable . Note that the contribution of any variable is also at its expense. Collectively, the contributions of all the other variables are measured by the sum of the associated entries in the comparison matrices. Adding them, we obtain:

The abovementioned contribution is partitioned to the remaining variables , To solve for the partitioning of the contributions, we

consider the relationship of variable these are

to variables other than

. Collectively,

. Adding them up, we obtain:

 With this, we are able to formulate a model that gives total contribution of variables to alternative with the

following system of ordinary differential equations:

• e. Consider the last system of ordinary differential equations. Adding the right-hand side expressions yielded

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. Also,

is

independent of the value of the alternatives

as well as

.

Therefore, we can multiply system.

to reduce the rate of increase of the whole

Although the model is not closed, a steady rate of units is added to the systems of ordinary differential equations per time step. The final model is as follows:

Compared to other decisions, a more preferred decision alternative increases at a faster rate. Hence, the most preferred decision is the one that has the highest value after a specified time step.

6.2 Illustration of Model 3

Again, we consider the same comparison matrix from the illustration in Models 1 and 2. The decision making problem is concerned with choosing the best warehouse site among three possible locations A, B and C. The comparison matrix is as follows:

The

decision

space

consists

of

three

variables

,

corresponding to three decision alternatives. From the model, we obtain:

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Solving the given systems of ordinary differential equations with Berkeley Madonna, we obtain the solution as shown in Figure 6.2.1. The method for numerical

approximation used was Runge Kutta 4, with a time step of 0.0001, and a time interval of

. Figure 6.2.1 Numerical Solution for Model 3 Illustration Using Berkeley Madonna

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At time

,

, the variables take the following values:

, Thus the preference for the three decision alternatives are

.

Rate of Change of Variables at Time

. At time

, if the initial values

are substituted in the system of ordinary differential equations, we

obtain the values for

,

, and

, representing the rate of

change for variables , and , respectively. From these values we can conclude that increases at a faster rate, followed by , then by , which is supported by the graph of the numerical solutions. Hence, from these, we can already conclude the priority rankings of the choices.

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CHAPTER 7

ANALYTIC SOLUTIONS FOR MODEL 2

In this chapter, analytic solutions are solved for special cases of Model 2. This study was unable to solve for the analytic solutions to Model 1, because of the difficulty in obtaining closed form solutions. The solutions were verified using Scientific Workplace v5.5. Closed form solutions to Model 3 can be derived same as Model 2 since Model 3 is linear. Recall the system of differential equations corresponding to Model 2. This is linear system of ordinary differential equations is homogeneous. The system is as shown below:

The solutions to the given system of ordinary differential equations are sets of trigonometric functions. This chapter also showed that the solutions are periodic in nature, and solved for the period of each solution.

7.1 Case 1: One Alternative

Consider a

comparison matrix, denoted by . Note that only takes the

form of , or a identity matrix, and that the corresponding takes the form of a

zero matrix. This

is

a trivial

case, since an eigenvector does not exist

for the

revised comparison matrix. This case is supported by the fact that there are no alternative decisions present.

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7.2 Case 2: Two Alternatives

Consider a

comparison matrix, denoted by

comparison matrix takes the form The eigenvalues are as follows:

.

. The revised

For

,

Corresponding eigenvector:

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The general solution to the linear homogeneous system of ordinary differential equations for Model 2 with two alternatives is given by:

Since the system has initial values, the general solution is transformed into a

solution of an Initial Value Problem (IVP). Given initial values

,

,

The arbitrary constants now take values,

,

.

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Theorem 7.2.1. Analytic Solution for Initial Value Problem (IVP) in Model 2 with Two Decision Alternatives. Define a homogeneous linear system of ordinary differential equations as:

Where

’s are the entries in the revised comparison matrix. Given initial values

,

, the solution to the IVP is:

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7.3. Case 3: Three Alternatives

Consider a

comparison matrix, denoted by

×

.

The revised

comparison matrix takes the form The eigenvalues are as follows:

.

For

,

Corresponding eigenvector:

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 Let For ,

Corresponding eigenvector:

The general solution to the linear homogeneous system of ordinary differential equations for Model 3 with three alternatives is:

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Since the system has initial values, the general solution is transformed into a

solution of an Initial Value Problem (IVP). Given initial values ,

,

,

The arbitrary constants now take real values equations.

,

and

satisfying the system of

Theorem 7.3.1. Analytic Solution for Initial Value Problem (IVP) in Model 2 with

Three Decision Alternatives. Given initial values , the solution to the Initial Value Problem is:

,

,

for some real numbers

, and where

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7.4 Periodicity of the Analytic Solutions

As observed in the numerical solutions of the second model, the solutions take forms that may be periodic in nature. This section showed that solutions to specific cases

of Model 2 are periodic. A function

is periodic if there exists

such that

The smallest

is the period of the function.

First, we define a function of the form

real nonzero constants,

,

and

. We want to show that

, for some is a periodic function.

Since

the coefficients of

and

for both

and

are equated to each other, and the system of equalities is as follows:

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Moreover, a function of the form

.

has a period of

Now, we consider the analytic solution for Model 2 with two alternatives,

Rewriting the abovementioned equation, we obtain

This system of equations is similar to the abovementioned function . Hence, the analytic solutions for Model 2 with two alternatives also have periodic equations. Next, we consider the analytic solution for Model 2 with three alternatives,

Rewriting this system of equations yields the following:

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Note that this also takes the form of vertical shift, due to the constants

, only with a added to the system of equations. A periodic

function with a vertical shift is still a periodic function, and hence, the analytic solutions for Model 2 with three alternatives also have periodic equations.

7.5 Absolute Extrema of the Analytic Solutions

In this section, the First Derivative Test (FDT) will be used to show the absolute

extrema of the solutions, as well as the values of where the solutions are at their extremum. The analytic solutions of Model 2 with two or three alternatives are of the form

where alternatives. Applying the FDT on these equations:

,

when there are three decision

By FDT, the maximum occurs at points

.

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7.6 Relative Extrema of the Analytic Solutions on the Interval

In this section, the relative extrema of the solutions for a given interval were determined. The analytic solutions are periodic, and we take an interval of length

where

, denotes the period of the functions. Since the period of every function takes the

form of , for some real-valued constant , we consider the interval .

The relative extremum of the functions on the interval

are computed as the

function value of some for some real numbers

on the interval .

, where

is a multiple of

,

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CHAPTER 8

MORE ILLUSTRATIONS

In this chapter, various illustrations were presented. These illustrations aimed to test the consistency of the qualitative interpretations of the three models. Numerical solutions of the systems of differentials will be the basis for the comparisons. Each illustration includes the original and the revised comparison matrices, the systems of differential equations, and their corresponding numerical solutions.

8.1 Rock-Paper-Scissor Interaction

The typical rock-paper-scissors game is an example of a scenario resulting in an inconsistency among the alternatives. Pairwise comparison on the three alternatives would result in a perfectly strong preference towards one alternative (rock over scissors, scissors over paper, paper over rock). In the end, however, there may be no single preferred decision, given that the goal of the decision maker is to win.

We define the variables corresponding to the decision variables rock, paper and scissors. These decision alternatives may represent other decision alternatives, with equivalent interpretations. We define the original and revised comparison matrices as:

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The systems of differential equations based on the three models are as follows:

 Model 1 Model 2 Model 3

Figures 8.1.1, 8.1.2 and 8.1.3 show the numerical solutions to Models 1, 2 and 3, respectively. The solutions had a similar interpretation; the three variables are coinciding.

Hence the three decision alternatives are equally preferred, or

.

47 Figure 8.1.1 Numerical Solution to Rock-Paper-Scissor Interaction, Model 1 Figure 8.1.2 Numerical Solution to Rock-Paper-Scissor Interaction, Model 2 Figure 8.1.3 Numerical Solution to Rock-Paper-Scissor Interaction, Model 3

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8.2 An Extension to the Rock-Paper-Scissor Interaction

Instead of having three decision alternatives, we now have four of them, with the

same principle as the rock-paper-scissors interaction. Let represent the four

decision alternatives, with A preferred over B, B over C, C over D, and D over A. The other pairwise comparisons, say A and C, have equal preferences. The system of differential equations are modeled similar to that of Illustration 1. The numerical solutions of the four variables are the same as that of the previous illustration. The graphs of the solutions coincide.

8.3 Four Ordered Decision Alternatives

In this scenario, we define four variables corresponding to four decision alternatives. They are termed as ordered since there exists an obvious ranking of the alternatives. The decision alternative is always more preferred than decision alternative , whenever, . This scenario is illustrated to verify if the same ranking would be shown in the models. The original and revised comparison matrices are defined as follows: 49

The systems of differential equations based on the three models are as follows:

 Model 1 Model 2 Model 3 Figures 8.3.1, 8.3.2 and 8.3.3 show the numerical solutions to Models 1, 2 and 3, respectively.

50 Figure 8.3.1 Numerical Solution with Four Decision Alternatives, Model 1 Figure 8.3.2 Numerical Solution with Four Decision Alternatives, Model 2 Figure 8.3.3 Numerical Solution with Four Decision Alternatives, Model 3

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CHAPTER 9

CONCLUSIONS AND RECOMMENDATIONS

We are able to use differential equations as an alternative tool for decision making. The three models presented were able to assign priority ranks for each of the choices determined. Moreover, the priority ranks of those obtained using Analytic Hierarchy Process and the three models presented are similar. This study may be extended to general cases. In this study, the analytic solutions for Model 2 were solved only for and comparison matrices. We were also able to show that the solutions for these models are periodic functions. The eigenvalues associated with a matrix is a pair of conjugate imaginary eigenvalues, while a matrix has a pair of conjugate imaginary eigenvalues, and 0 as the third eigenvalue.

Model 3 is formulated by considering nodes with a distance of at most 2 from the primary node. The system of ordinary differential equations formed using this model are linear in nature, and thus the analytic solutions may also be solved. Hence, the following may be done for further studies:

• 1. Prove the periodicity of solutions to the system of differential equations for Model 2 with

decisions;

• 2. Prove the conjecture that for an comparison matrix, there are

pairs of conjugate imaginary eigenvalues and 0 as an eigenvalue if

is odd;

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3.

Formulate another model as an extension to Model 3, that is, to include higher distance of the nodes from the primary reference node (up to );

• 4. To incorporate multiple hierarchies in the models presented; and

• 5. To include noise in the systems of ordinary differential equations, making them stochastic in nature (SDEs).

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