MCDA methods in decision making - Revision history

Ferramiro: /* The Analytical Hierarchy Process (AHP) */

2022-03-18T15:31:27Z

The Analytical Hierarchy Process (AHP)

← Older revision		Revision as of 15:31, 18 March 2022
Line 81:		Line 81:
	[[File: tabla.png\|frame\|none\|alt=Alt text\|Table 2: AHP scale]]		[[File: tabla.png\|frame\|none\|alt=Alt text\|Table 2: AHP scale]]

	The next step is to combine all the pair-wise comparisons between the alternatives and merge it into a matrix for each criterion. A project with three alternatives and four criteria would have results <ref~~> Barford, M. and Leleur, S., 2021. Decision Support and Strategic Assessment. 2nd ed. Technical University of Denmark: DTU Management Compendium. p.93. <~~/~~ref~~> such as:		The next step is to combine all the pair-wise comparisons between the alternatives and merge it into a matrix for each criterion. A project with three alternatives and four criteria would have results <ref name="libro"/> such as:

	[[File: tabla2.png\|frame\|none\|alt=Alt text\|Table 3: Alternatives combination]]		[[File: tabla2.png\|frame\|none\|alt=Alt text\|Table 3: Alternatives combination]]

Ferramiro: /* The Analytical Hierarchy Process (AHP) */

2022-03-18T15:31:01Z

The Analytical Hierarchy Process (AHP)

← Older revision		Revision as of 15:31, 18 March 2022
Line 77:		Line 77:
	As mentioned before, the AHP is borne on attributes hierarchy, which have at least three levels: the overall goal, the multiple criteria, and all the alternatives. In some situations, there are more than three levels since there can be sub - levels such as sub criteria. <br /> <br />		As mentioned before, the AHP is borne on attributes hierarchy, which have at least three levels: the overall goal, the multiple criteria, and all the alternatives. In some situations, there are more than three levels since there can be sub - levels such as sub criteria. <br /> <br />

	One of the first steps is, after assigning the different weights to each criterion, is to perform a pair-wise comparison between the different alternatives of the decision-making process. Saaty, in order to ease that process, created a nine-point intensity scale of importance between the two elements. The scale is shown in the following table <ref~~> Barford, M. and Leleur, S., 2021. Decision Support and Strategic Assessment. 2nd ed. Technical University of Denmark: DTU Management Compendium. p.92. <~~/~~ref~~>		One of the first steps is, after assigning the different weights to each criterion, is to perform a pair-wise comparison between the different alternatives of the decision-making process. Saaty, in order to ease that process, created a nine-point intensity scale of importance between the two elements. The scale is shown in the following table <ref name="libro"/>

	[[File: tabla.png\|frame\|none\|alt=Alt text\|Table 2: AHP scale]]		[[File: tabla.png\|frame\|none\|alt=Alt text\|Table 2: AHP scale]]

Ferramiro: /* The Analytical Hierarchy Process (AHP) */

2022-03-18T15:30:45Z

The Analytical Hierarchy Process (AHP)

← Older revision		Revision as of 15:30, 18 March 2022
Line 91:		Line 91:
	Other method is the geometric mean method. It consists of the calculation of the geometric mean for each row of each matrix and obtaining like that, the overall scores for each alternative. <br />		Other method is the geometric mean method. It consists of the calculation of the geometric mean for each row of each matrix and obtaining like that, the overall scores for each alternative. <br />

	The AHP allows to check how inconsistent the assessment was. This can be possible with the eigen vector method. It provides a consistency ratio, which, the higher it is, the more consistent the matrix is. It derives from the maximum eigen value and is calculated as<ref~~> Barford, M. and Leleur, S., 2021. Decision Support and Strategic Assessment. 2nd ed. Technical University of Denmark: DTU Management Compendium. p.98. <~~/~~ref~~>: <br />		The AHP allows to check how inconsistent the assessment was. This can be possible with the eigen vector method. It provides a consistency ratio, which, the higher it is, the more consistent the matrix is. It derives from the maximum eigen value and is calculated as<ref name="libro"/>: <br />

	[[File: cr.png\|frame\|none\|alt=Alt text\|Image 1: Consistency Ratio Calculation ]]		[[File: cr.png\|frame\|none\|alt=Alt text\|Image 1: Consistency Ratio Calculation ]]

Ferramiro: /* The Analytical Hierarchy Process (AHP) */

2022-03-18T15:29:43Z

The Analytical Hierarchy Process (AHP)

← Older revision		Revision as of 15:29, 18 March 2022
Line 110:		Line 110:
	In order to solve some of the weaknesses that the standard AHP presents, the multiplicative AHP <ref> Olson, D., Fliedner, G. and Currie, K., 1993. Comparison of the REMBRANDT system with analytic hierarchy process. European Journal of Operations Research, 82. </ref>, which also goes by the name of REMBRANDT (Ratio Estimation in Magnitudes or Deci-Bells to Rate Alternatives which are non-DominaTed), was created in 1992 by Lootsma. <br /> <br />		In order to solve some of the weaknesses that the standard AHP presents, the multiplicative AHP <ref> Olson, D., Fliedner, G. and Currie, K., 1993. Comparison of the REMBRANDT system with analytic hierarchy process. European Journal of Operations Research, 82. </ref>, which also goes by the name of REMBRANDT (Ratio Estimation in Magnitudes or Deci-Bells to Rate Alternatives which are non-DominaTed), was created in 1992 by Lootsma. <br /> <br />

	It aims to fix three specific weaknesses of the standard AHP process. First, the 1 to 9 scale of AHP. Lootsma proposed this new scale<ref~~> Barford, M. and Leleur, S., 2021. Decision Support and Strategic Assessment. 2nd ed. Technical University of Denmark: DTU Management Compendium. p.101. <~~/~~ref~~>, which is on a geometric scale. <br />		It aims to fix three specific weaknesses of the standard AHP process. First, the 1 to 9 scale of AHP. Lootsma proposed this new scale<ref name="libro"/>, which is on a geometric scale. <br />

	[[File:rembrandt.png\|frame\|none\|alt=Alt text\|Table 4: AHP vs REMBRANDT Scale ]]		[[File:rembrandt.png\|frame\|none\|alt=Alt text\|Table 4: AHP vs REMBRANDT Scale ]]

Ferramiro: /* The Analytical Hierarchy Process (AHP) */

2022-03-18T15:28:34Z

The Analytical Hierarchy Process (AHP)

← Older revision		Revision as of 15:28, 18 March 2022
Line 118:		Line 118:
	The third and last point intends to fix how the individual scores are aggregated. The AHP uses a method based on calculating the eigen vectors and adding the multiplication of scores by the criteria weight. REMBRANDT uses geometric mean calculation to reach the scores. <br /> <br />		The third and last point intends to fix how the individual scores are aggregated. The AHP uses a method based on calculating the eigen vectors and adding the multiplication of scores by the criteria weight. REMBRANDT uses geometric mean calculation to reach the scores. <br /> <br />

	In order to show in a better way how the process takes place, here is an example<ref~~> Barford, M. and Leleur, S., 2021. Decision Support and Strategic Assessment. 2nd ed. Technical University of Denmark: DTU Management Compendium. p.102. <~~/~~ref~~> where there are three alternatives, A, B and C and four criteria W, X, Y and Z with weights 0.493, 0.246, 0.174 and 0.087 respectively.		In order to show in a better way how the process takes place, here is an example<ref name="libro"/> where there are three alternatives, A, B and C and four criteria W, X, Y and Z with weights 0.493, 0.246, 0.174 and 0.087 respectively.

	[[File: examplerembr.png\|frame\|none\|alt=Alt text\|Image 2: REMBRANDT Example ]]		[[File: examplerembr.png\|frame\|none\|alt=Alt text\|Image 2: REMBRANDT Example ]]

Ferramiro: /* MCDA vs CBA */

2022-03-18T15:27:53Z

MCDA vs CBA

← Older revision		Revision as of 15:27, 18 March 2022
Line 24:		Line 24:
	On the other hand, the CBA method does not consider all the effects in most cases. The geopolitical and strategical issues have a vast influence in most of the projects and the CBA method does not include that. <br /> <br />		On the other hand, the CBA method does not consider all the effects in most cases. The geopolitical and strategical issues have a vast influence in most of the projects and the CBA method does not include that. <br /> <br />
	Furthermore, MCDA may be seen as an extension of the CBA. The CBA just represents a small part of the decision-making process, so MCDA makes it possible, in just one approach, to combine the CBA with the rest of qualitative effects. To achieve that, it is necessary to perform a previous decision process, which is subjective and assigns weights to each effect involved in the project, including the CBA. <br /> <br />		Furthermore, MCDA may be seen as an extension of the CBA. The CBA just represents a small part of the decision-making process, so MCDA makes it possible, in just one approach, to combine the CBA with the rest of qualitative effects. To achieve that, it is necessary to perform a previous decision process, which is subjective and assigns weights to each effect involved in the project, including the CBA. <br /> <br />
	Finally, the previous process, can be performed in most cases since usually monetary and political or strategic effects are involved in most projects. Otherwise, in the table below <ref~~> Barford, M. and Leleur, S., 2021. Decision Support and Strategic Assessment. 2nd ed. Technical University of Denmark: DTU Management Compendium. p.84. <~~/~~ref~~>, it is shown which methods ought to be used for each scenario.		Finally, the previous process, can be performed in most cases since usually monetary and political or strategic effects are involved in most projects. Otherwise, in the table below <ref name="libro"/>, it is shown which methods ought to be used for each scenario.

	[[File: imagen.png\|frame\|none\|alt=Alt text\|Table 1: MCDA vs CBA]]		[[File: imagen.png\|frame\|none\|alt=Alt text\|Table 1: MCDA vs CBA]]

Ferramiro: /* References */

2022-03-18T15:27:15Z

References

← Older revision		Revision as of 15:27, 18 March 2022
Line 135:		Line 135:
	<references>		<references>
	<ref name= "origen"> Buchanan, L. and O’Connell, A., 2006. A brief History of Decision Making. Harvard Business Review, [online] </ref>		<ref name= "origen"> Buchanan, L. and O’Connell, A., 2006. A brief History of Decision Making. Harvard Business Review, [online] </ref>
	<ref name= "~~origen~~"> ~~Buchanan~~, L. and ~~O’Connell~~, A., ~~2006~~. ~~A brief History~~ of ~~Decision Making~~. ~~Harvard Business Review, [online]~~ </ref>		<ref name= "libro"> Barford, M. and Leleur, S., 2021. Decision Support and Strategic Assessment. 2nd ed. Technical University of Denmark: DTU Management Compendium. </ref>

Ferramiro: /* References */

2022-03-18T15:26:35Z

References

← Older revision		Revision as of 15:26, 18 March 2022
Line 134:		Line 134:
	= References =		= References =
	<references>		<references>
			<ref name= "origen"> Buchanan, L. and O’Connell, A., 2006. A brief History of Decision Making. Harvard Business Review, [online] </ref>
	<ref name= "origen"> Buchanan, L. and O’Connell, A., 2006. A brief History of Decision Making. Harvard Business Review, [online] </ref>		<ref name= "origen"> Buchanan, L. and O’Connell, A., 2006. A brief History of Decision Making. Harvard Business Review, [online] </ref>

Ferramiro at 15:25, 18 March 2022

2022-03-18T15:25:38Z

← Older revision		Revision as of 15:25, 18 March 2022
Line 7:		Line 7:

	== History of Decision Making ==		== History of Decision Making ==
	During the middle of the last century, Chester Bernard created the term "decision making" <ref> "origen" </~~ref~~>. It was intended to be a replacement and a narrower descriptor for "resource allocation and policy making". Additionally, it was an intended term for how managers though about what decisions to make at a certain time. Also, William Starbruck, professor in University of Oregon clearly stated that "Decision implies the end of deliberation and the beginning of action." <br /> <br />		During the middle of the last century, Chester Bernard created the term "decision making" <ref name="origen"/>. It was intended to be a replacement and a narrower descriptor for "resource allocation and policy making". Additionally, it was an intended term for how managers though about what decisions to make at a certain time. Also, William Starbruck, professor in University of Oregon clearly stated that "Decision implies the end of deliberation and the beginning of action." <br /> <br />
	Barnard along with others such as James March, Herbert Simon and Henry Mintberg laid the foundation for the study of managerial decision making. It tried to find answers to the questions of who makes decisions, and how.		Barnard along with others such as James March, Herbert Simon and Henry Mintberg laid the foundation for the study of managerial decision making. It tried to find answers to the questions of who makes decisions, and how.
	The study of decision making involves a numerous number of disciplines such as mathematics, sociology, psychology, economics, etc. It also investigated different risk and organizational behaviours in relation to achieving the best outcome. <br /> <br />		The study of decision making involves a numerous number of disciplines such as mathematics, sociology, psychology, economics, etc. It also investigated different risk and organizational behaviours in relation to achieving the best outcome. <br /> <br />

Ferramiro: /* References */

2022-03-18T15:23:40Z

References

← Older revision		Revision as of 15:23, 18 March 2022
Line 134:		Line 134:
	= References =		= References =
	<references>		<references>
	<ref name= "Buchanan, L. and O’Connell, A., 2006. A brief History of Decision Making. Harvard Business Review, [online]" </ref>		<ref name= "origen"> Buchanan, L. and O’Connell, A., 2006. A brief History of Decision Making. Harvard Business Review, [online] </ref>