Analytic Hierarchy Process

• Multiple-criteria decision-making

• Real world decision problems

– multiple, diverse criteria
– qualitative as well as quantitative information

Comparing apples and oranges?

Spend on defence or agriculture?
Open the refrigerator - apple or orange?
AHP
• Information is decomposed into a hierarchy of
alternatives and criteria
• Information is then synthesized to determine
relative ranking of alternatives
• Both qualitative and quantitative information
can be compared using informed judgements
to derive weights and priorities
Example: Car Selection

• Objective
– Selecting a car
• Criteria
– Style, Reliability, Fuel-economy Cost?
• Alternatives
– Civic Coupe, Saturn Coupe, Ford Escort,
Mazda Miata
Hierarchical tree
Selecting
a New Car

Style Reliability Fuel Economy

- Civic - Civic - Civic
- Saturn - Saturn - Saturn
- Escort - Escort - Escort
- Miata - Miata - Miata
Ranking of criteria
• Weights?
• AHP
– pair-wise comparison matrix
aij = ai/aj
= weight of row (i) criterion to relative to
weight of column (j) criterion

aij = [1:Equal, 3:Moderate, 5:Strong,

7:Very strong, 9:Extreme]
Ranking of criteria
Pair-wise relative importance

Style Reliability Fuel Economy

Style 1/1 1/2 3/1

Reliability 2/1 1/1 4/1

Fuel Economy 1/3 1/4 1/1

Ranking of priorities

Row Normalized
S R F sums Row sums
S 1 0.5 3 4.5 0.344
R 2 1 4 7 0.535
0.333 0.25 1.0 1.58333 0.121
F
13.08333 1.0
 Preference
• Style 0.344
• Reliability 0.535
• Fuel Economy 0.121

Selecting
a New Car
1.0

Style Reliability Fuel Economy

0.344 0.535 0.121
Ranking alternatives
1. Style

Row Normalized
Style sum row sum
Civic Saturn Escort Miata
Civic 1/1 1/4 4/1 1/6 5.417 0.167
Saturn 4/1 1/1 4/1 1/4 9.25 0.286

Escort 1/4 1/4 1/1 1/5 1.7 0.053

Miata 6/1 4/1 5/1 1/1 16 0.494

 32.367 1.0
Ranking alternatives
2. Reliability
Row Normalized
sum row sum
Reliability Civic Saturn Escort Miata
Civic 1/1 2/1 5/1 1/1 9 0.378
Saturn 1/2 1/1 3/1 2/1 6.5 0.273

Escort 1/5 1/3 1/1 1/4 1.783 0.075

Miata 1/1 1/2 4/1 1/1 6.5 0.273

 23.783 1.0
Ranking alternatives
3. Fuel Economy

Miles/gallon Normalized

Fuel Economy Civic 34 0.301

(quantitative Saturn 27 0.239
information)
Escort 24 0.212
Miata 28 0.248
113 1.0
 Selecting
a New Car
1.0

Style Reliability Fuel Economy

0.344 0.535 0.121

- Civic 0.167 - Civic 0.378 - Civic 0.301

- Saturn 0.286 - Saturn 0.273 - Saturn 0.239
- Escort 0.053 - Escort 0.075 - Escort 0.212
- Miata 0.494 - Miata 0.273 - Miata 0.248
Overall Ranking of alternatives

Style Reliability Fuel

Economy
Civic 0.167 0.378 0.301 0.344 0.296
Saturn 0.286 0.273 0.239 * 0.273
0.535 =
0.084
Escort 0.053 0.075 0.212
0.121 0.346 Best
Miata 0.494 0.273 0.248
AHP Eigenvector Method

• Objective
– Eliminates inconsistency (errors) in pair-wise
comparisons
• Applies
– To ranking (weights) of criteria
– To ranking (scores) of alternatives under each criteria
• Approach
– Iterative
Ranking of priorities

• Eigenvector [Ax = x]

Iterate
1. Take successively higher powers of matrix A
= {aij = ai/aj}
2. Normalize the row sums
Continue until difference between successive row
sums is less than a pre-specified value
Car Selection Example:
Hierarchical tree
Selecting
a New Car

Style Reliability Fuel Economy

- Civic - Civic - Civic
- Saturn - Saturn - Saturn
- Escort - Escort - Escort
- Miata - Miata - Miata
Ranking of criteria
Pair-wise relative importance
Matrix A

Style Reliability Fuel Economy

Style 1/1 1/2 3/1

Reliability 2/1 1/1 4/1

Fuel Economy 1/3 1/4 1/1

 Ranking of criteria
Errors in pair-wise matrix A
Style Reliability Fuel Economy
Style 1/1 1/2 3/1
Reliability 2/1 1/1 4/1
Fuel Economy 1/3 1/4 1/1
Sum 10/3 7/4 8
Normalized
Style 0.3 0.286 0.375 Weights
Reliability 0.6 0.571 0.5 (rows) not
Fuel Economy 0.1 0.143 0.125 consistent
Ranking of priorities
• Matrix A

Row Normalized
S R F sums Row sums
S 1 0.5 3 4.5 0.344
R 2 1 4 7 0.535
F 0.333 0.25 1.0 1.583 0.121
13.083 1.0
Ranking of priorities
• Matrix A2

Row A2 Row A Row Diff. in

S R F sums sums sums sums
S 3 1.75 8 12.75 0.319 0.344 - 0.025
R 5.333 3 14 23.333 0.559 0.535 0.024
F 1.167 0.667 3 4.833 0.121 0.121 0
39.917 1.0 1.0
Ranking of priorities
• Matrix A3

Row A3 Row A Row Diff. in

S R F sums sums sums sums
S 9.167 5.25 24 38.417 0.319 0.319 0
R 16 9.167 42 67.167 0.559 0.559 0
F 3.5 2 9.167 14.667 0.122 0.121 0.001
120.25 1.0 1.0
 Preference
• Style 0.319
• Reliability 0.559
• Fuel Economy 0.122

Selecting
a New Car
1.0

Style Reliability Fuel Economy

0.319 0.559 0.122
Ranking alternatives
1. Style
Matrix A

Row Normalized
Style sum row sum
Civic Saturn Escort Miata
Civic 1/1 1/4 4/1 1/6 5.417 0.167
Saturn 4/1 1/1 4/1 1/4 9.25 0.286

Escort 1/4 1/4 1/1 1/5 1.7 0.053

Miata 6/1 4/1 5/1 1/1 16 0.494

 32.367 1.0
 Ranking alternatives
1. Style
Matrix A2

Row Norm. A2 - A
Style sum row sum row sum
C S E M
Civic 4 2.167 9.833 1.196 17.196 0.106 -0.061
Saturn 10.5 4 25.25 1.967 41.717 0.258 -0.028

Escort 2.7 1.363 4 0.504 8.567 0.053 0

Miata 29.25 10.75 50 4 94 0.582 0.088

 161.48 1.0
 Ranking alternatives
1. Style
Matrix A3

Row Norm. A3 - A2
Style C sum row sum row sum
S E M
Civic 22.3 10.408 40.479 4.371 77.558 0.112 0.006
Saturn 44.613 20.804 93.083 9.667 168.27 0.242 -0.016

Escort 12.175 5.054 22.771 2.095 42.095 0.061 0.008

Miata 108.75 46.563 230 21.563 406.88 0.586 0.004

 694.79 1.0
Ranking alternatives
1. Style

Style Eigenvector
Civic Saturn Escort Miata
Civic 1/1 1/4 4/1 1/6 0.1160
Saturn 4/1 1/1 4/1 1/4 0.2470

Escort 1/4 1/4 1/1 1/5 0.0600

Miata 6/1 4/1 5/1 1/1 0.5770

Ranking alternatives
2. Reliability

Reliability Civic Eigenvector

Saturn Escort Miata
Civic 1/1 2/1 5/1 1/1 0.3790
0.2900
Saturn 1/2 1/1 3/1 2/1
0.0740
Escort 1/5 1/3 1/1 1/4
0.2570
Miata 1/1 1/2 4/1 1/1
Ranking alternatives
3. Fuel Economy

Miles/gallon Normalized

Fuel Economy Civic 34 0.301

(quantitative Saturn 27 0.239
information)
Escort 24 0.212
Miata 28 0.248
113 1.0
 Selecting
a New Car
1.0

Style Reliability Fuel Economy

0.3196 0.5584 0.1220

- Civic 0.116 - Civic 0.379 - Civic 0.301

- Saturn 0.247 - Saturn 0.290 - Saturn 0.239
- Escort 0.060 - Escort 0.074 - Escort 0.212
- Miata 0.577 - Miata 0.257 - Miata 0.248
Overall Ranking of alternatives

Style Reliability Fuel

Economy
Civic 0.116 0.379 0.301 0.3196 0.306
Saturn 0.247 0.290 0.239 * 0.272
0.5584 =
Escort 0.060 0.074 0.212 0.094
0.1220 0.328 Best
Miata 0.577 0.257 0.248
Handling Costs
• Dangers of including Cost as another criterion
– political, emotional responses?
• Separate Benefits and Costs hierarchical trees
• Costs vs. Benefits evaluation
– Alternative with best benefits/costs ratio
Cost vs. Benefits
Normalized Cost/Benefits
Cost Cost Ratio

• MIATA $18K 0.333 0.9840

• CIVIC $12K 0.222 1.3771
• SATURN $15K 0.2778 0.9791
• ESCORT $9K 0.1667 0.5639
 54K 1.0
Complex decisions
•Many levels of criteria and sub-criteria
• Application areas
– strategic planning
– resource allocation
– source selection, program selection
– business policy
– etc., etc., etc..
• AHP software (ExpertChoice)
– computations
– sensitivity analysis
– graphs, tables
• Group AHP