Comparison of "Closest to the Ideal" MCDM Approaches

Summary: Pourcavad and Shirouyehzad attempted to address a major criticism of MCDM- that different techniques may yield different results when applied to the same problem. They evaluate the utility of three MCDM methods, TOPSIS, ELECTRE, and VIKOR, which all look for the solution that is “closest to the ideal.” This study is a comparison analysis of these methods applied to eight parallel production lines from a factory.

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

In this technique the chosen solution must have the shortest distance from the ideal solution and the farthest distance from the negative-ideal solution. The process for the TOPSIS procedure is as follows:

1.  Compute the normalized decision matrix
2.  Calculate the weighted normalized decision matrix
3.  Determine the ideal and negative-ideal solution
4.  Calculate the separation measures, using the n-dimensional Euclidean distance
5.  Calculate the relative closeness to the ideal solution
6.  Rank the preference order (mathematical formulas concerning these steps may be found in the original document)

ELECTRE (Elimination and Et Choice Translating REality)

This technique is based on a Multi-Attribute Utility Theory that sequentially decreases the number of alternatives the decision maker is faced within a set of non-dominated alternatives. The goal of this method is to find the best alternative, that which simultaneously trumps all others and is not trumped by any others. With this method, it is important to accurately weight all possible options. The process for ELECTRE is as follows:

1. Obtain the normalized values of all the criteria
2. Construct the outranking relations and develop a graph representing the domination relations among the alternatives
3. Acquire a minimum dominating subset by using the minimum concordance and maximum discordance indices
4. Select the last decision or repeat steps 2-4 until a single element remains (mathematical formulas concerning these steps may be found in the original document)

VIKOR (Compromise Ranking Method)

This technique was developed as a multi attribute decision making method to solve a problem that contains different units and opposing criteria. The method is meant to find a compromise solution among the opposing criteria by comparing the measure of closeness to the ideal alternative. The process for VIKOR is as follows:

1. Determine the best and worst function and use them to formulate ranking measure
2. Use the algorithm (mathematical formulas concerning these steps may be found in the original document) to rank the alternatives
3. Propose as a compromise solution the alternative which is ranked best by the algorithm and which satisfies both acceptable advantage and acceptable stability

Findings: In order to compare the techniques, the study ranked parallel production lines in different areas of the Chadormalu Mining and Industrial Company, considering fourteen criteria with each method. Each method yielded different results. The authors then ranked the production lines using aggregate methods. However, the results of the MCDM methods are not similar to the aggregate method, and the study cannot conclusively state which method yielded the correct answer. (Pourjavad & Shirouyehzad, 2011)

Source: 

Pourjavad, E., & Shirouyehzad, H. (2011). A MCDM Approach for Prioritizing Production Lines: A Case Study. International Journal of Business and Management. Retrieved from: ccsenet.org/journal/index.php/ijbm/article/download/10099/8811

Supplier selection using a multi-criteria decision aid method

Introduction:

This article applies MCDA to the selection of vendors and suppliers for business and manufacturing firms by replacing the "Courses of Action" with suppliers available to the company. The idea came out of the growing push for "lean" supply and production as a way to speed up the selection of suppliers while still choosing the right one. The article specifically addresses issues of weighting variables through the use of simultaneous change of weights, developing a sensitivity analysis. This sensitivity analysis checks the how sensitive the weighted variables are and how they could change analytic results. The method developed was then applied to an Italian public road and rail transportation firm.

Summary:

The authors of the article note that decision makers now have a wide set of criteria for selecting suppliers and a single-objective model is impractical for businesses as they weigh various necessary criteria. These multiple criteria make a multiple criteria decision aid necessary for choosing suppliers. The authors identify key criteria such as product quality, cost, delivery times, and reliability, but also leave room for more options depending on the business. The article identifies clear trade-offs between variables like quality and cost, and prioritizes proper weighting based on the need of the firm.

Since the subject of supplier selection made simple out-ranking methods suitable, the authors chose to use the PROMETHEE method. This method allows for the use of "psuedo-criteria" as well as real criterion in comparing both quantitative and qualitative measures for criteria. The PROMETHEE method also provided more flexibility and a higher stability of results.

In the development of a weighting method for criteria in selecting a supplier, the authors found that most methods were either too arbitrary or limiting and required additional sensitivity analysis to test the influence of the weights. In addition, multiple decision makers in a company may weight criteria differently, resulting in conflicts. The authors' solution was to use a rank-order weighting, where the group ranks the criterion by priority and then these are weighted by giving them values. The authors chose the values by using an algorithim where the sum of the set of numbers will be equal to one, where the highest ranked criteria received the highest value and so on.

The authors then applied this technique to a simplified supplier selection problem faced by an Italian public road and rail firm. The firm was looking to choose one of three possible suppliers and their criteria were:

-Mark up, overhead, and cost of doing business

-Prototyping time

-Processing time needed to develop designs

-Design revision time

-Quality

-Co-design and the supplier's effort within the project

-Technological levels

Based on rankings, these criterion were maximized or minimized in value. The results showed that the third supplier proved to be the best compromise choice. While they excelled in only one criterion (Co-Design), this value was highly weighting and they also ranked fairly well in other factors. On the other hand, the other two suppliers ranked well in other criteria, but these had lower weights. In the ensuing sensitivity analysis, the weight values were shifted (but priority rankings for criteria were still maintained). The authors found that several criteria consistently grouped together while conflicting with other groups of criteria, meaning that these groups stayed clustered in their results. In the end, the third supplier came out as the best choice 50 % of the time while other suppliers consistently ranked lower, validating the results of the study.

Conclusion:

The article provides an example of how to use MCDA as a means of choosing suppliers and vendors for a company. It does this by providing an outranking weighting system through the use of the PROMETHEE method and a sensitivity analysis to confirm results. The approach is intended to help decision makers deal with supplier selection where performance criteria can actually be in direct conflict (quality and cost), and where there are multiple decision makers involved. The authors' running of multiple assessments created weights generated at random (and then reordered according to rank) allowing for the performance of sensitivity analysis as well as a verification of initial results. The advantages of this method is its relative simplicity and that the only needed consensus within a group of decision makers is the relative priority of criteria.

While this method and application of MCDA is a little complex (compared to other methods, especially in intelligence analysis), it removes some of the flaws of arbitrary weighting and allows for easier group consensus. In addition, the running of multiple tests using different weights can strengthen and confirm findings while testing the validity of rankings. The method this article suggests seems well-suited to the issue of supplier selection.

Source:

Dulmin, R., Mininno, V. (2002). Supplier selection using a multi-criteria decision aid method. Journal of Purchasing and Supply Management, 9 (4), pp. 177-187.

http://www.sciencedirect.com/science/article/pii/S1478409203000323

The methodology of multiple criteria decision making/aiding in public transportation.

Introduction:

This article discusses the use of the Multi Criteria Decision Matrix (MCDM) technique as it applies to public transportation decisions.  The author uses the case study in the article to highlight the usage of the MCDM technique for the development of a mass transit system on Poland.

Summary:

In the article the author presented a case study that dealt with the development scenarios of the mass transit system in Czestochowa, Poland.  The municipal authorities wanted to know what the expectations and requirements the passengers had of the system.  The MCDM methodology was used to focus the analysis on the passengers’ expectations.  The interests of the municipal authorities were not represented.  The evaluation criteria that was selected for the study included:

• Waiting time: average time spent waiting at the initial stop
•  Riding time: time required to cover the distance of an average trip
•  Timeliness: number of rides that are out of schedule per 1000
• Reliability: number of rides cancelled that are out of a schedule per 1000
•  Situational safety: number of threats (vandalism, etc.) per 100 rides
• Transferring frequency: quotient of the total number of rides and the total number of travels
• Comfort of travel: percentage share of rides carried out in very good conditions (uncrowded and clean vehicles)
• Financial efficiency: quotient of the total income generated by the mass transit system to its total cost
• Investment profitability: internal rate of return

Four courses of action for the mass transit system were developed.  The courses of action included:

• Variant 0: Continue current passive investment in the transportation system 
• Variant 1: Embrace the renovations and extensions of the existing tramway transportation system and a certain reduction of the bus transportation system
• Variant 2: Focus on a substantial extension and improvement of the bus transportation system
• Variant 3: Focus on the introduction of a light rail transportation system, with a substantial reduction of the bus system and a modernization of the tramway system

To evaluate the courses of action the researchers used the ELECTRE III method, which essentially is a pairwise comparison of the criteria to determine a ranking.  Based on the ranking produced by the ELECTRE III method and the values provided for the criteria variant 1 and variant 2 were determined to be the most desired options.

Conclusion:

This article demonstrated a practical application of the MCDM model.  The methodology allows decision makers to take into account different aspects and consider the viewpoints of different stakeholders and consider multiple problems in order to arrive at a decision.    

Source:

Zak, J. (2011). The methodology of multiple criteria decision making/aiding in public transportation. Journal of Advanced Transportation , 45 (1), pp. 1-20.

Evaluating Sustainable Development Planning Using Fuzzy MCDM Approach

Summary:

The purpose of the paper was to examine an industry that wants to pursue sustainable development planning. This situation can be regarded as a fuzzy MCDM program. The paper proposes an alternative approach, to cope with evaluation of fuzzy MCDM problems, particularly where there is dependence among considered criteria. The authors chose the sustainable development strategy for fishing in Taiwan to illustrate the fuzzy Analytic Hierarchy Process (AHP) for determining the weights of criteria.

Technique:

Hierarchy frame for sustainable development planning

In this paper the authors employ triangular fuzzy numbers to represent the decision makers’ subjective preferences on the considered criteria, as well as for the criteria measurements to evaluate a sustainable development planning strategy for industry.

The overall MCDM approach the authors used to evaluate a sustainable development planning:

1.      Establish a hierarchy frame for sustainable development planning where the preliminary classification consists of 3 aspects involving business activities, government policy and socioeconomic effects

2.      Employ factor analysis to extract 4 independent common factors from the criteria in business activities, government policy and socioeconomic effects

3.      Brought in 15 evaluators, including those from government sector who are in charge of sustainable development, academic experts, executives of aquatic products processors as well as members of environmental interest groups

4.      Integrate their subjective judgments to construct the evaluation frame using AHP composed of the 4 common factors and then derive the relative weights and non-fuzzy BNP values corresponding to each criterion

5.      The synthetic utility value corresponding to each sustainable development strategy is aggregated by the fuzzy weights with fuzzy performance values and the best investment strategies can then be decided

The authors use one overarching goal of sustainable development industry to examine aspects that impact the company to then apply criteria to decide which strategy is best.

Strengths:

1.      APH method for determining weights of criteria can reduce uncertainty when fuzzy MCDM  

2.      MCDM can be applied to situations that have multiple and mutually conflicting objectives

Challenges:

1.      The anticipated performance values of unquantifiable criteria cannot be specified with qualitative numerical data in qualitative evaluation

Conclusion:

Using this method, the authors demonstrate that the non-additive fuzzy integral technique can overcome the criteria non-independent case. By employing an additive aggregating method to derive the synthetic utility of participating companies are able to evaluate all available alternatives and determine preferable strategies which conform to sustainable development.

From: Omega (The International Journal o f Management Science) (2005). Retrieved from http://mcdm.ntcu.edu.tw/tzeng/publication/Evaluating%20sustainable%20fishing%20development%20strategies%20using%20a%20fuzzy%20MCDM%20approach.pdf

Multi-criteria Decision Making for Water Resource Management: A Case Study of the Gediz River Basin, Turkey

Summary

In this case study, of the Gediz river basin in Turkey, Baris Yilmaz and Nilmun Harmancioglu explore water resource management using an MCDM (multi-criteria decision making) tool. They account for environmental, social and economic factors in their study of the water distribution, primarily focused on the irrigation aspect.

Technique

Using a baseline and two scenarios; better and worse conditions, they explore three hydro-meteorological scenarios to get an assessment of water budget and the possible alternative uses of the water under different scenarios. In order to rank the methods of water usage, several methods were used. Simple additive weighting, compromise programming and technique for order preference by similarity to ideal solution are all used in the MCDM.

Strengths

• · Clearly defined parameters for making decisions

• · Criteria can be weighted to allow varying importance to be accounted for

• · It is flexible in the factors that it can incorporate

• · Used in conjunction with other analytic techniques

Challenges

• · Different techniques may yield different results

• · Reliability and success are reliant on the right criteria being chosen

Conclusion

A water resource management model that uses environmental, social and economic factors can be used to decide the best water resource management techniques. However, this relies strongly on the weighting of the factors involved and can be easily skewed. Coincidentally, the MCDM matches the current decision-makers policies in water resource management. Therefore, in the Gediz river basin example, the MCDM proves to be a useful framework for the evaluation of water resource management techniques.

Bibliography

Multi-criteria decision making for water resource management: a case study of the Basin, Turkey. Harmancioglu, Nilmun. Yilmaz, Baris. 5 October 2010. Retrieved from: http://www.scielo.org.za/pdf/wsa/v36n5/v36n5a06.pdf

MCDM Used in Healthcare (Cancer Screening) Industry

Introduction:
This article uses the Multi Criteria Decision Matrix (MCDM) technique to
field test the framework for decision making on a specific cervical cancer screening test (liquid-based cytology, LBC) by a private health plan in South Africa. MCDM supports complex decision-making that allows a structured consideration of factors that are both measurable and value-based in approach. The objective of the study with use of MCDM technique was to expand the scope of field testing both geographically, and in consideration with the specific type of intervention.

Study:
Using a committee of health care professionals, MCDM was applied to determine what would be the most probable opportunity to enter the market of LBC testing in a community where traditional Pap smears are provided at no cost to citizens.

Greatest weights were given to budget impact, cost-effectiveness and completeness and consistency of reporting evidence. When appraising LBC for cervical cancer screening, the committee formed for the case study assigned the highest scores to relevance and disease severity.

The contextual criteria applied to this study were: impact on future decisions, relationship with pathology providers, impact on screening intervals, and patient expectation; these criteria were evaluated qualitatively.

Conclusion:
This article demonstrates the application of the MCDM technique as it applies to the healthcare industry. The use of this methodology incorporates many different aspects and viewpoints of individuals and/or stakeholders that are involved to reach a decision, leading to a broadening of LBC cervical cancer screening acceptability in healthcare decision-making.

Further field testing is ongoing to collaboratively advance MCDM approaches and contribute to more transparent and efficient healthcare decision-making.

Source:
Miot, J. (2012). Field testing of a multi-criteria decision analysis (MCDA) framework for coverage of a screening test for cervical cancer in South Africa. Retrieved from http://www.resource-allocation.com/content/pdf/1478-7547-10-2.pdf

MCDM Methodolies, Applications and other Stats 1999-2009

Introduction: This study, conducted by researchers at the Islamic Azad University in Tehran examined the applications of the MCDM methodologies. It examined who was using these methodologies, in what field and which of these methodologies were being applied. The study examined 628 papers from 20 scholarly journals ranging from 1999-2009. The study classified these papers in 12 application areas.

Study Summary: The study sought to classify data regarding publications regarding MCDM analysis. The authors identified the method(s) of the publications, application area, journal of publication, year of publication, nationality of the author and identified a fuzzy or crisp rating for each application.

The authors note that initially, between 1999 and 2009, 1128 papers were published in more than 200 journals. However, many of these journals only had a single MCDM related publication. They narrowed the scope of their search to the twenty publications with the most MCDM related articles and found that these twenty publications contained 628 total MCDM related publications. Of these papers, 386 (61.5%) had a direct application of MCDM theory.

Next, the authors identified twelve key areas of MCDM application. These areas are as follows; environment management, water management, business and financial management, transportation and logistics, manufacturing and assembly, energy management, agricultural and forestry management, managerial and strategic planning, project management and evaluation, social service, military service and other. The authors then identified 27 MCDM techniques and cross referenced the MCDM techniques with the applications to produce this chart:

Conclusion Summary:

There is a detailed summary of each of the publications in their respective application area that I'm not going to go into here. However, there were some interesting overall findings.

The authors found that the number of MCDM related publications has drastically increased over the past ten years:

The authors also found that the overwhelming majority of publications were from the European Journal of Operational Research:

Finally, and what I found most interesting, was the author's nationalities and frequency of MCDM publications by nationality:

Source:
http://web.ebscohost.com/ehost/detail?vid=4&hid=8&sid=e4efb211-1dbb-4eaa-8e3f-61011bcc0152%40sessionmgr13&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=a9h&AN=67419561&anchor=GoToAllQVI

Selecting the Right MCDA Methodology

Introduction:In this article, authors Guitouni and Martel examined several of the numerous multi-criteria decision-making tools and methods to help determine tentative guidelines for selecting the optimal method for an individual situation.

Study Summary:The authors summarized 29 different MCDM-related methodologies for consideration, such as the Weighted-Sum, where an alternative's performance is calculated as a weighted sum of its criteria evaluations, and the Maximin method, where the performance of an alternative is determined by its weakest evaluation. These methods are categorized by how they sort through criteria, as one factor in the study. The authors also recognize that the decision-maker factor in selecting an appropriate methodology is difficult or impossible to "plan ahead" for, due to the individual nature of each DM. Ultimately, the authors seek to aim their study through the steps in the following diagram.

Source: http://www.sciencedirect.com/science/article/pii/S0377221798000733

  Conclusion Summary:At the end of the article, the authors suggested the following tentative guidelines for selecting an MCDA suitable for the situation at hand (slightly paraphrased):
1. Determine the stakeholders of the decision process. If there are many decision makers, one should think about group decision making methods/support systems.
2. Consider the DM's way of thinking/preferences. If he is more comfortable with one form of comparison, use of that form is recommended.
3. Determine the decision problematic pursued by the DM. If the DM wants an alternatives ranking, then a ranking method is appropriate, and so on.
4. Choose the process that can properly handle the input information available and for which the DM can easily provide the required information.
5. The compensation degree of the MCAP method is important to consider.
6. The fundamental hypotheses of the method are to be met/verified, otherwise one should choose another method.
7. The decision support system coming with the method is an important aspect to be considered.

The authors recognize that these guidelines are incomplete and do not allow for a decisive selection of method in many circumstances - they recommend additional study on the subject, especially an in-depth comparative study of different MCDA methods to identify the appropriate circumstances for the application of each.

Source:

Adel Guitouni, Jean-Marc Martel, Tentative guidelines to help choosing an appropriate MCDA method, European Journal of Operational Research, Volume 109, Issue 2, 1 September 1998, Pages 501-521, ISSN 0377-2217, 10.1016/S0377-2217(98)00073-3.
(http://www.sciencedirect.com/science/article/pii/S0377221798000733)

Integrated tools to enhance MCDM for use in selecting ERP software systems

Summary
This paper, written by Tuncay Gürbüz, S. Emre Alpetkin, and Gülfem Işilkar Apletkin, proposes to use Analytic Network Process (ANP), Choquet Integral (CI) and Measuring Attractiveness by a Categorical Based Evaluation Technique (MACBETH) in a hybrid multi-criteria decision making (MCDM) evaluation of ERP solutions for a company.

Technique
The technique espoused uses ANP to provide a general framework for developing a supermatrix which can evaluate interrelationships and allow for weighting criteria. CI is used to determine conjunctive or disjunctive behavior between criteria. MACBETH is used to allow decision makers’ input into ranking attractiveness of elements, which allows qualitative preferences to be quantified.

This overall MCDM approach was used to evaluate four ERP software solutions using the following general steps:

1. Identify the ERP software selection and evaluation criteria

2. Build a model and establish relationsDecide on the analytic method to use (If there is an outer-dependence between sub-criteria, then analyze with ANP)

3. Analyze sub-criteria of the same cluster in order to define the conjunctive and disjunctive behavior between them. (If there is such a relation, use CI; If there is no interaction, use ANP)

4. After handling sub-criteria, take into consideration the upper level criteriaMake the final aggregation and obtain a ranking (If there are conjunctive/disjunctive behavior between criteria, use Shapley indices and the interaction values including the weights of the sub-criteria and alternatives’ individual preferences in order to perform the final aggregation)

The authors propose the use of a decision framework or model consisting of three levels: at the top, the objective of the problem, followed by the listing of criteria, then the list of alternatives.

Strengths
* Gives a framework for implementing MCDM using a variety of tools
* Allows for the use of qualitative and quantitative measures
* Utilizes input from decision makers making it more likely to gain acceptance
* Is flexible enough to be applicable to other IT initiatives
* Clear guidelines as to which tool to use when throughout the process

Challenges
* The model is based in complex mathematical functions which may limit its use
* The model appears to be time-consuming to use

Conclusion
Expenditures in IT, especially when faced with enterprise-wide systems like ERP, should require a methodical evaluation approach. The hybrid-MCDM system proposed in this paper allows an analyst to measure both the quantitative and qualitative criteria while deciding which alternatives are most applicable. Because the criteria are determined within the organization, the approach is customizable for each use, making it flexible. However, it is a complex system of measurements that could be time consuming for the analyst. Its use is most likely only feasible for large IT expenditures.


From: An Integrated Decision Support System for Selecting Software Systems (January 30, 2012). Retrieved from http://www.thinkmind.org/download.php?articleid=eknow_2012_3_20_60044