Scribd
Upload
86 views21 pages

Multi-Criteria Decision Making: MCDM Approaches

This document discusses multi-criteria decision making (MCDM) approaches. It provides examples of decision problems that involve multiple objectives like locating a nuclear power plant, managing research, and selecting major projects or partners. It then describes two MCDM methods: the weighted score method, which calculates weighted scores for alternatives based on criteria, and TOPSIS, which selects the alternative closest to an ideal solution and farthest from a negative ideal solution based on normalized and weighted criteria scores.

Uploaded by

KentDemeterio
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
86 views21 pages

Multi-Criteria Decision Making: MCDM Approaches

This document discusses multi-criteria decision making (MCDM) approaches. It provides examples of decision problems that involve multiple objectives like locating a nuclear power plant, managing research, and selecting major projects or partners. It then describes two MCDM methods: the weighted score method, which calculates weighted scores for alternatives based on criteria, and TOPSIS, which selects the alternative closest to an ideal solution and farthest from a negative ideal solution based on normalized and weighted criteria scores.

Uploaded by

KentDemeterio
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 21

1

Multi-Criteria Decision
Making
MCDM Approaches

Introduction
Zeleny (1982) opens his book Multiple
Criteria Decision Making with a statement:
It has become more and more difficult to
see the world around us in a unidimensional
way and to use only a single criterion when
judging what we see

Introduction

Many public sector problems and even


private decision involve multiple objectives
and goals. As an example:
Locating a nuclear power plant involves
objectives such as:

Safety
Health
Environment
Cost
3

Examples of Multi-Criteria
Problems

In a case study on the management of


IWFAP research (Moore et. al 2009), the
following objectives have been identified:

Profitability
Growth and diversity of the product line
Increased market share
Maintained technical capability
Firm reputation and image
Research that anticipates competition

Examples of Multi-Criteria
Problems

In determining an association capability to


maintain survived nationwide: several
objectives could be considered:

Cost
Health
Reliability
Importance of areas
5

Examples of Multi-Criteria
Problems

In selecting a major partner or project,


several objectives can be considered. These
objectives or criteria include:

Job market local and overseas


Job pay and opportunity to progress
Interest in the major oil and gas industry
Likelihood of success in the major fields
Future job image
Parent wish
6

Examples of Multi-Criteria
Problems

Project type selection problem. This


problem is a good example of multi-criteria
decision problem. Criteria include:

Project Location
Types of contract
Types of project
Salary Rates
Terms and condition
Payments involved
7

Approaches For IWFAP Mission

Several approaches for IWFAP exist. We


envision the following:

Continuous Training Program


Update latest technique as per skills
Analytic Hierarchy Process (AHP)
Goal programming ?
Continuous searching for opportunity
8

Weighted score method

Determine the criteria for the problem


Determine the weight for each criteria. The
weight can be obtained via survey, AHP,
etc.
Obtain the score of option i using each
criteria j for all i and j
Compute the sum of the weighted score for
each option .
9

Weighted score method

In order for the sum to make sense all criteria


scale must be consistent, i.e.,
More is better or less is better for all criteria
Example:
In the Project or partner selection problem, all
criteria (Religion, Types of project, Location,
Terms and condition, Contract, Profit sharing,
Etc:) more is better
If we consider other criteria (age # of experinces)
less is better
10

Weighted score method

Let Sij score of option i using criterion j


wj weight for criterion j
Si score of option i is given as:
Si = wj Sij
j

The option with the best score is selected.


11

Weighted Score Method

The method can be modified by using


U(Sij) and then calculating the weighted
utility score.
To use utility the condition of separability
must hold.
Explain the meaning of separability:
U(Si) = wj U(Sij)
U(Si) U( wj Sij)
12

Example Using Weighted Scoring


Method

Objective
Selecting a Project and Partner

Criteria
Terms and condition, Types of project, Profit
sharing

Alternatives
Contractor types, Subcontractor, Per head
13

TOPSIS METHOD

Technique of Order Preference by


Similarity to Ideal Solution
This method considers three types of
attributes or criteria
Qualitative benefit attributes/criteria
Quantitative benefit attributes
Cost attributes or criteria
14

TOPSIS METHOD

In this method two artificial alternatives are


hypothesized:

Ideal alternative: the one which has the best level


for all attributes considered.
Negative ideal alternative: the one which has the
worst attribute values.

TOPSIS selects the alternative that is the closest to


the ideal solution and farthest from negative ideal
alternative.
15

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.

Let xij score of option i with respect to criterion j


We have a matrix X = (xij) mn matrix.
Let J be the set of benefit attributes or criteria
(more is better)
Let J' be the set of negative attributes or criteria
(less is better)
16

Steps of TOPSIS

Step 1: Construct normalized decision


matrix.
This step transforms various attribute
dimensions into non-dimensional attributes,
which allows comparisons across criteria.

Normalize scores or data as follows:


rij = xij/ (x2ij) for i = 1, , m; j = 1, , n
i
17

Steps of TOPSIS

Step 2: Construct the weighted normalized


decision matrix.
Assume we have a set of weights for each
criteria wj for j = 1,n.
Multiply each column of the normalized
decision matrix by its associated weight.
An element of the new matrix is:
vij = wj rij
18

Steps of TOPSIS

Step 3: Determine the ideal and negative ideal


solutions.

Ideal solution.
A* = { v1* , , vn*}, where
vj* ={ max (vij) if j J ; min (vij) if j J' }
i

Negative ideal solution.


A' = { v1' , , vn' }, where
v' = { min (vij) if j J ; max (vij) if j J' }
i

i
19

Steps of TOPSIS

Step 4: Calculate the separation measures for


each alternative.

The separation from the ideal alternative is:


Si * = [ (vj* vij)2 ]
i = 1, , m
j

Similarly, the separation from the negative ideal


alternative is:
S'i = [ (vj' vij)2 ]
i = 1, , m
j
20

Steps of TOPSIS

Step 5: Calculate the relative closeness to


the ideal solution Ci*
Ci* = S'i / (Si* +S'i ) ,

0 Ci* 1

Select the option with Ci* closest to 1.


WHY ?
21

You might also like