This lesson focuses on the question: How to apply the method of Analytic Hierarchy Process (AHP) in the issue of multi criteria decision making?

Two examples of the AHP use in a practical decision are presented in the lesson. The first example describes the use of the AHP in choosing a leader for a company and the second solves an example of the best house choosing.

The first describes the use of the AHP in choosing a leader for a company whose founder is about to retire. There are several competing candidates and several competing criteria for choosing the most suitable one. By using the AHP, the Board of Directors is able to choose the best candidate in a rational, transparent way that can be examined and understood by all concerned.

The example is described in this following PDF-file

Talk Analytic Hierarchy Process_Example Leader

which is available at:

https://docplayer.net/14799135-Talk-analytic-hierarchy-process-example-leader.html

Its electronic version is avaiable at:

https://www.yumpu.com/en/document/read/4024525/talk-analytic-hierarchy-process-example-leader

The second describes the use of AHP in choosing the best house. It is described in SAATY, T. L. (2002). Decision Making with the Analytic Hierarchy Process. Scientia Iranica, 9(3), 215-229. The example is in this following PDF-file, pages 220-223

Decision Making with the AHP

There are eight criteria and three alternatives in the example. The calculation of the criteria normalized priority vector (Table 3), alternative distributive priorities (Table 4) and the composite priority vector for distributive mode of the results (Table 6) is important to us.

Solution of the first example in MS Excel

In the following part the choice of the best leader will be explained and shown in the MS Excel. We accept the decision scenario and decision hierarchy. The goal of this decision is to select the most suitable leader from a field of three candidates. The factors/criteria to be considered are Experience, Education, Charisma, and Age.

The Saaty matrix for criteria pairwise comparisons and calculation of the vector of non-normalized criteria weights and the criteria normalized priority Vector is in the Table below. The function GEOMEAN is applied for the calculation of the vector of non-normalized criteria weights. The function is used for the row of Saaty matrix.

The next step is to calculate priorities for the candidates with respect to Experience, Education, Charisma and Age, like in the calculation of criteria priority. We assume that the matrixes are consistent, it means C.R. is less 0.1.

The final step is to calculate priorities (total evaluations) for the candidates. See Table below.

Looking only at Tom, we can see that his total evaluation with respect to the Goal is 0.358, calculated as follows:

• Tom’s priority with respect to Experience is  0.2172  x  0.5462  is  E₁
• Tom’s priority with respect to Education is  0.1884  x  0.1276  is  E₂
• Tom’s priority with respect to Charisma is  0.703  x  0.270  is  E₃
• Tom’s priority with respect to Age is  0.2654  x  0.0564  is  E₄
• for a total evaluation of Tom is  E₁ + E₂ + E₃ + E₄ = 0.358.