Summary:
This paper introduces how to use the Analytic Hierarchy
Process (AHP), a famous method that is part of the Multi-Criteria Decision
Making process (MCDM). AHP was created to solve issues when facing a mix of
qualitative, quantitative, and conflicting factors in the MCDM process. AHP
uses the judgements of decision makers to form a decomposition of problems into
hierarchies. Each section is further broken down into different levels within
the hierarchy which combine with the decision maker’s problem that needs to be
solved. The hierarchy is used to derive ratio-scaled measures for alternatives,
and the relative value that alternatives have against organizational goals and
project risks. AHP contains 4 steps.
Step 1: Define
the problem and state the goal or objective.
Step 2: Define
the criteria or factors that influence the goal, and structure these factors
into levels and sublevels.
Step 3: Use
paired comparisons of each factor with respect to each other that forms a
comparison matrix with calculated weights, ranked eigenvalues, and consistency
measures. (See chart below for comparison matrix example).
Step 4: Synthesize
the ranks of alternatives until the final choice is made.
The paper used a family upgrading smart phones to present an
example how AHP was applied to make the best choice.
Three smart phones were considered (1,2,3) and the four qualities
that were evaluated were cost, display resolution, battery life and internal
storage.
The first step in the AHP process was to build a table
illustrating the problem and comparing each phones attribute.
The second step involves creating the “parent-child”
relationship.
The third step is the most complex part of the process and
involves assigning attributes from the matrix shown below step 3. The authors compared
each criteria and device choice using a computer algorithm to determine the
value of each selection in a measurable format. The graphic below shows the
results of the calculations. Without explaining the math behind equations, each
family member rated the criteria of what was important to them, and averaged
the numbers from the matrix.
The results of the calculations above were further refined
using mathematical equations. The chart below displays the results. The most important
factor to consider is the Priority column which is the relative ranking of the
criteria produced by dividing each element of the matrix with the sum of the
column.
Step 4 shows the final rankings of the AHP process based on
the Priority and costs benefit ratio to come to a conclusion on the best smart
phone to purchase.
Critique:
The authors used SAS/IML statistical software to run the
equations which I did not include due to the complexity of the problem.
Nonetheless, I attempted to break down the AHP process by reducing as much
technical information as possible, yet still highlight how the process works.
When applying this process to intelligence analysis, one of the main problems
that arises is assigning attributes to the criteria in a matrix. Because many
of the issues analyst face are qualitative in nature, analysts may assign a high
degree of varying importance to a piece of criteria. Nevertheless, this
technique improves forecasting ability only when applied correctly, and can solve problems which have multiple scenarios.
Posts
I thought this article was summed up very well. The graphics were helpful. You mentioned one of the difficulties that arises comes into play when assigning attributes to the criteria matrix. Do you think other SATs such as those in the idea generation category would help identify attributes effectively?
ReplyDeleteShadya, thank you for the comment. To answer your question, using other SATs may be helpful in streamlining the process of assigning attributes in the matrix, but may also confine an analyst’s viewpoint to a certain degree. Nonetheless, the issue of assigning attributes will likely come down to the facilitator, team leader or decision maker’s guidance or goal of the project.
ReplyDeleteI found this article interesting and appreciated the easily digestible information and relatable example problem. I can see how step 3 can make the process more complex, but is necessary for easily comparable quantifiable data. Does the article address the difficulty in adding qualitative attributes to problems that are more non-quantitative? My only note is that the given example seems more straight forward in this process, though obviously this is for the sake of the reader grasping the subject matter.
ReplyDeleteThe authors used statistical data to process qualitative data which I excluded and vaguely understand myself. But to answer your question, the authors processed qualitative data by assigning attributes via the matrix, and using software to process the math. However, the issue is not the assigned attributes themselves, but the value assigned by each family member which was measured based upon their own significance. In this case, the authors did not provide any further literature or examples on how to ensure the values are meaningful, nor the implications.
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