Professional Documents
Culture Documents
Making (MCDM)
Identifying Price
Decision Criteria Interior Comfort
Durability
Repair Record
Performance
Allocating Weights Price 10
to Criteria Interior Comfort 8
Durability 6
Repair Record 4
Performance 2
Decision-making process: Car buying example (2/8)
Developing
Alternatives Dodge Audi Isuzu Chevy
Selecting
an Alternative
The Toyota
is the best.
Implementing
the Choice Appraising
Decision Results
Decision-making process: Some comments (3/8)
1) Problem Identification
Solving the wrong problem perfectly is no better than
do nothing for the right problem
Problem is identified by comparing the current state
with some standards that represent a desired state of
affaires:
Past performance, previously set goals, performance of other
units/organizations
2) Decision Criteria
They reflect the factors that decision
makers think important in making the
choice
They are not equally important
A simple approach to deal with different
criteria is to assign them different weights
Judgments are involved in selecting
criteria and assigning weighs
Decision-making process: Some comments (5/8)
3) Developing and Analyzing
Alternatives
INITIAL INTERIOR DURA- REPAIR PERFOR- HAND-
PRICE COMFORT BILITY RECORD MANCE LING TOTAL
ALTERNATIVES (10) (8) (5) (5) (3) (1)
Identification of
Decision criteria
Evaluation of decision
Allocation of effectiveness
Weights to criteria
Development of
alternatives
Analysis of
alternatives
Implementation of
The alternative
8.3 Structure of Objectives
Overall Objective
Attribute for Sub- Attribute for Sub- Attribute for Sub- Attribute for Sub-
objective 1 objective 1 objective n objective 1
1) Model for MCDM
Attribute for Sub- Attribute for Sub- Attribute for Sub- Attribute for Sub-
objective 1 objective 1 objective n objective 1
3) First level objective
The highest level of this structure
generally represents the broad overall
objectives that are instrumental in
initiating the multiple objective decision
problem in the first place.
These objectives are, however, often
vaguely stated and, hence, unoperational.
3) Second level objectives
As we go down the hierarchical level,
objectives at the lower level are more specific
and more operational than those in the
higher level.
They are perceived as means to achieving
higher ends represented by objectives in the
higher level.
Thus objectives at the lowest level of the
hierarchy are most specific and most
operational.
4) Attributes for objectives
An objective is operational is there is a
practical way to assess the level of achieving
such an objective.
To facilitate this practical method, a set of
attributes is assigned to each objective in the
lowest level.
An attribute is a measurable quantity whose
value reflects the degree of achievement for a
particular objective.
4) Hierarchical structure of
objectives for the choosing a Car
Maximum satisfaction car to buy
a. b. c. d. e. a. b. . a. b.
Hawes
Tract
1Proximity to other . 10Cost
facilities
a.
Chath a. Maintain distance from
am year-round aquatics . Reduc
e on-
Street b. Maintain distance from
site
Bartle seasonal aquatic centers
y Park c. Maintain distance from . devel
opme
community centers
North nt
Cary
d. Be accessible to public . costs
parks
Park b.
e. Be accessible to high
Reduc
schools
8.4 How to deal with
Incommensurable units
To solve the problem of incommensurable
units , we need to attribute scales for each
objective.
There are many ways to attribute scales for
each objective.
Nominal Scales
Ordinal Scales
Interval Scales
Ratio Scales
Proportional Scoring
Proportional Scoring is the most application
method to attribute scales for each objective.
Called proportional because scales linearly.
Ui (x) x Worst
Best Worst
Proportional Scoring for price
Car Price After
(000s) Prop Price: Best = 150, Worst =400
Mercedes 400 0
UP(C) = 1;
(M)
UP(M) = 0;
Chevrolet 150 1 UP(T) = 0.6;
(C) UP(V) = 0.2;
Toyota (T) 250 0.6
Toyota is 0.4 away from best to worst.
Volvo is 0.8 away from best to worst.
Volvo (V) 350 0.2
Proportional Scoring for fuel
efficiency
Car Fuel Eff. After
(mpg) Prop Price: Best = 35, Worst =25
Mercedes 25 0
Uf(T) = 1;
(M)
Uf(M) = 0;
Chevrolet 28 0.3 Uf(C) = 0.3;
(C) Uf(V) = 0.5;
Toyota (T) 35 1
Chevrolet is 0.3 away from best to worst.
Volvo is halfway between best/worst.
Volvo (V) 30 0.5
Proportional Scoring for
comfort Index
Car Comfort After
Index Prop Price: Best = 10, Worst =3
Mercedes 10 1
Uc(M) = 1;
(M)
Uc(C) = 0;
Chevrolet 3 0 Uc(T) = 3/7;
(C) Uc(V) = 6/7;
Toyota (T) 6 3/7
Toyota is 4/7 away from best to worst.
Volvo is 1/7 away from best to worst
Volvo (V) 8 6/7
After the Proportional Scoring
Mercedes (M) 0 0 1
U(T)
U(C)
U(V)
U(M)
8.6 Weighted Sum Model vs.
Weighted Product Model
8.6.1 Weighted Sum Model (WSM)
8.6.2 Weighted Product Model (WPM)
8.6.1 Weighted Sum Model
(WSM)
The weighted sum model (or WSM) is probably
the most commonly used approach, especially in
single dimensional problems.
If there are M alternatives and N criteria then,
the best alternative is the one that satisfies (in
the maximization case) the following expression:
WSM: an Example
Weighted score/sum method
Let Sij score of option i using criterion j
wj weight for criterion j
Si score of option i is given as:
Sij = wj Sij
The scaling is not necessary 1 to 9 but for qualitative data such as preference,
ranking and subjective opinions, it is suggested to use scale 1 to 9.
Example 1: Choosing a car
(1/7)
Three objectives:
Price
Fuel efficiency
Comfort
Stage 1: Make pairwise
comparisons of objectives. (2/7)
Price 1 2 9
Fuel 1/2 1 7
wi *
wi
w1 * w2 * ... wn *
Stage 2: (4/7)
Sum of w*=4.39
Then:
w1=w1* /4.39=2.62/4.39=0.6
w2=w2* /4.39=1.52/4.39=0.35
w3=w3* /4.39=0.25/4.39=0.05
Stage 3: Check the consistency of
the decision makers comparisons (6/7)
(1) To get the sum of all the quantities in each column.
S j a1 j a1 j ... anj
(2) To get check parameter max.
max w1 S1 w2 S 2 ... wn S n
(3) Compare max with numbers in the table. If max is less than the
corresponding number in the table, it passes the check of consistency.
Stage 3: (7/7)
Price 1 2 9 W1=0.6
x5
x1
x3
x6
x2
x0
f1
9.5
Input to TOPSIS
TOPSIS assumes that we have m alternatives
(options) and n attributes/criteria and we have the
score of each option with respect to each criterion.
Civic 7 9 9 8
Saturn 8 7 8 7
Ford 9 6 8 9
Mazda 6 7 8 6
Applying TOPSIS to
Example (2/17)
m = 4 alternatives (car models)
n = 4 attributes/criteria
Saturn 64 49 64 49
Ford 81 36 64 81
Mazda 36 49 64 36
xij2 230 215 273 230
i
(x2)1/2 15.17 14.66 16.52 15.17
Step 1 of TOPSIS (4/17)
Step 1 (b): divide each column by
(x2ij )1/2 to get rij
Style Rel. Fuel Cost
Civic 0.46 0.61 0.54 0.53
WHY ?
In-class Example: recruiting
an assistant (1/7)
A company wants to recruit a new principal assistant for its
international market. Four candidates have been shortlisted:
Anna, Tom, Jack and Emma.
Four criteria have been selected to make the decision. As
the post requires intensive contact with various customers, it
is necessary for the principal assistant to have strong
interpersonal skills, with the ability to interact effectively with
diverse client styles within different working environments.
The role involves dealing with the international market, and
as a result, extensive experience of living abroad would be
advantageous. Similar work experience would be beneficial.
Each candidate is required to sit a written exam to assess
their knowledge of international culture.
The performances of each candidate against the four criteria
are shown in Table 8.1.
In-class Example: recruiting
an assistant (2/7)
Table 8.1 Weights of the criteria and performances of the alternatives.
cost 1 2 9
transport 1/2 1 7
facility 1/9 1/7 1
Homework 7-2:
A company is going to choose one of the supplier
among the three according to three criteria: service,
quality, and price. The weights for each of them are
0.2 for service, 0.4 for quality, 0.4 for price. The
normalized decision table is given as follows. Help the
company to choose the supplier according to TOPSIS.
Service Quality Price
(the more, the (the more, the (the less, the better)
better) better)