Ilhan Veli Kocabay

20727576
Analytic Hierarchy Process
The AHP is designed to solve complex multi-criteria decision problems. It is based on the
innate human ability to make sound judgments about small problems. It Iacilitates decision
making by organizing perceptions, Ieelings, judgments, and memories into a Iramework that
exhibits the Iorces that inIluence a decision (Saaty, 2001)
The AHP is perhaps, the most widely used decision making approach in the world today. In
AHP a problem is structured as a hierarchy. Once the hierarchy has been constructed, the
decision maker begins the prioritization procedure to determine the relative importance oI the
elements in each level. Prioritization involves eliciting judgments in response to questions
about the dominance oI one element over another with respect to a property. The scale used
Ior comparisons in AHP enables the decision-maker to incorporate experience and knowledge
intuitively and indicate how many times an element dominates another with respect to the
criterion (Millet, 1997b). The decision-maker can express his preIerence between each pair oI
elements verbally as equally important, moderately more important, strongly more important,
very strongly more important, and extremely more important. These descriptive preIerences
would then be translated into numerical values 1,3,5,7,9 respectively with 2,4,6, and 8 as
intermediate values Ior comparisons between two successive qualitative judgments.
Reciprocals oI these values are used Ior the corresponding transposed judgments. The table
below shows the comparison scale used by AHP.
%able 1. %he fundamental scale
Intensity oI Importance DeIinition Explanation
1 Equal Importance Two activities contribute equally to
the objective
3 Moderate Importance Experience and judgment slightly
Iavor one activity over another
5 Strong Importance Experience and judgment strongly
Iavor one activity over another
7 Very Strong Importance An activity is Iavored very strongly
over another; its dominance
demonstrated in practice
9 Extreme Importance The evidence Iavoring one activity
over another is oI the highest
possible order oI aIIirmation
For compromise between the above
values
Sometimes one needs to interpolate
a Compromise judgment
numerically because there is no
good word to describe it.

Finally, all the comparisons are synthesized to rank the alternatives. The output oI AHP is a
prioritized ranking oI the decision alternatives based on the overall preIerences expressed by
the decision maker. Sensitivity analysis is used to investigate the impact oI changing the
priorities oI the criteria on the Iinal outcome. The Iinal stage is to calculate a Consistency
Ratio (CR) to measure how consistent the judgements have been relative to large samples oI
purely random judgements. II the CR is much in excess oI 0.1 the judgements are
untrustworthy.

Overview of AHP Applications
The Iollowing applications illustrate a wide alternative list which AHP applications have been
applied (Forman & Gass).
Firms have to make a selection one alternative Irom a set oI alternatives. The most typical
AHP application is choice an alternative (Bayazit & Karpak, 2005). Generally, AHP used Ior
product selection, vendor selection, organizational structure decisions and policy decisions.
%e Xerox used AHP Ior R&D decisions on portIolio management, technology
implementation, and engineering design selection. Xerox also used AHP Ior marketing
decisions, market segment prioritization, product-market matching, and customer requirement
structuring. General Motors used AHP to perIorming design alternatives, risk management.
AHP helps General Motors Ior deciding the most cost-eIIective designs selection. AHP can
use in Investment Analysis. A.K. Simpson & Co. use Ior their investment about robotic and
automate assembly lines.
AHP has been instrumental in numerous resource allocation decisions some involving
billions oI dollars.
The Northeast Fisheries Science Center (NEFSC) is a Iederal government organization. They
use AHP deciding aIIect oI the continental shelI, concentrating primarily on human and
environmental to abundance, distribution, health, and Iood quality. Managers monitors and
analysis eIIect oI these variables by AHP.
AHP is used Ior determine customer and company values. It can be used cost-beneIit study
used to Iilter out unsuitable projects and provide decision makers with a comparison oI rates
oI return.
Benchmarking or comparison is one oI the most important parts oI the business process.
These applications use Ior compare the competitor Iirms. Finding out what other companies
are doing to operate their key business processes, setting the right goals, and achieving those
goals, is a key strategy that helps put an enterprise on the road to being best. AHP is a
important part oI the benchmarking.
AHP can use Ior Quality Management System. It helps to give decisions about Leadership,
InIormation Analysis, Strategic Planning, Human Resource Development and Management,
Process Management, Business Results, and Customer Focus and SatisIaction. These titles
aIIect the quality system and Ior improvement we have to make decision. AHP is important at
this point.
Public Policy decisions are complicated not only because they involve competing objectives,
but also because they impact multiple economic sectors and sometimes overlapping
jurisdictions. Communication oI competing constituencies` objectives Traditional dialogs tend
to Iocus on alternatives, rather than objectives. The structure provided by AHP allows
competing constituencies to better understand each other and to develop win win`
solutions.
Health Care decisions are oIten complex, value laden, and involve numerous players and
uncertainties. Physicians sometimes have to make assumptions about patient Ieelings relative
to pain and discomIort, willingness to pay un-reimbursed costs, and Iear oI the unknown.
AHP is useIul in structuring the complexity oI health care decisions and ascertaining values
and preIerences oI those involved in health care decision making.






ReIerences
8ayazlL C karpak 8 (2003) An AP ALlCA1lCn ln vLnuC8 SLLLC1lCn Pawall lSAP
lorman L P Cass S l 1be Aoolytlc nletotcby ltocess Ao xposltloo WashlngLon
Millet, Ido, 1997b. Ethical decision making using the analytic hierarchy process, Journal oI
Business Ethics, V. 17, No.11, 1197-1204.
Saaty, Thomas L., 2001. Decision making in complex environments: the analytic network
process Ior decision making with dependence and Ieedback, RWS Publications, USA.