Simple Multi-Attribute Rating Technique (SMART)
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=== What is MCDM? === | === What is MCDM? === | ||
| − | + | MCDA is a relatively new approach for solving decision-making problems. The method tries to resolve some of the issues related to theoretical evaluation problems by taking an engineering approach, rather than an economics approach. The overall objective of MCDA is to allow the decision maker to break down complex decision problems into smaller and more tangible subproblems, which can be solved independently and then combined again. MCDA generally consist of a number of steps which breaks down the decision problem into three different components: (1) the alternatives, (2) the criteria for evaluating the performance of the alternatives and (3) the relative importance of the defined criteria. The identification of alternatives and the evaluation criteria constitute the objective part of the method, while the criteria weights for modelling the preference structure of the decision maker is considered the subjective part of the analysis. The purpose of MCDA is not to derive some optimal solution to a problem, but rather to assist the decision maker during an often complicated process of making decisions concerning multiple aspects. Some of the most recognised benefits associated with MCDA include helping the decision maker to understand the decision-making problem in further detail, improve the satisfaction of the decision process itself, improve the quality of the decision and to increase productivity during the decision-making process. There is a wide verity of MCDA tool, however one of the more common tools, which is the tool that this article will focus on, is the Simple Multi-Attribute Ranking Technique (SMART). | |
=== What is SMART? === | === What is SMART? === | ||
Revision as of 16:41, 28 February 2021
Abstract
Simple Multi-Attribute Rating technique (SMART) is a method for conducting Multi-Criteria Decision Making (MCDM), in which assessment and selection of the best alternative, amongst several different alternatives, is based on a list of relevant socio-economic criteria. MCDM is a relatively new method for assessing alternatives or projects and it stems from the science of operations research. MCDM differs from traditional evaluations methods, like the cost-benefit-analysis (CBA), in multiple ways. Where a traditional CBA compares costs and benefits on a monetary scale, MCDM allows the assessment of alternatives on both a monetary as well as non-monetary scale. SMART is considered as one of the main techniques for MCDM and the overall purpose of SMART is generally to assist the decision maker when trying to choose the best option amongst several alternatives. SMART is based on a linear additive model, which means that a performance score for all individual alternatives can be calculated as the sum of the relative performance of each alternative on each identified evaluation criterion multiplied by the relative importance of that specific criterion. The techniques therefore consist of three distinct elements: A set of alternatives, a set of criteria that the alternatives are to be evaluated on and the relative importance of these criteria, called the criteria weights. The best alternative is thus found by calculating a total performance score for each alternative and then selecting the one that reveals the highest total performance score. SMART provides a simple and intuitive method for supporting the decision maker. The method has become fairly popular in recent years and is used throughout many areas of application such as transportation and logistics, problem planning, project selection and manufacturing.
Big idea
Background
Until now, one of the most common methodologies for assessing projects or conducting decision-making analysis, has been the traditional cost-benefit analysis (CBA). In the traditional CBA, the projects or alternatives are assessed using monetary calculations. This involves calculating the total net benefits of a project or alternative, based on the costs and benefits associated with that project or alternative, and then compare the achieved net benefits against the benefits of other projects. However, in recent years there has been a growing awareness of impacts that are difficult or even impossible to monetise and that these impacts are of importance and should be included in the decision-making process as well. Therefore, various decision-making methodologies has undergone changes in order to incorporate non-monetary aspects into the decision-making processes. Multi-Criteria Decision Analysis (MCDA) makes it possible to include both monetary and non-monetary aspect in the decision-making processes. Therefore, MCDA provides a tool for assessment or evaluation of different projects or alternatives, when both monetary and non-monetary aspects should be taken into account.
What is MCDM?
MCDA is a relatively new approach for solving decision-making problems. The method tries to resolve some of the issues related to theoretical evaluation problems by taking an engineering approach, rather than an economics approach. The overall objective of MCDA is to allow the decision maker to break down complex decision problems into smaller and more tangible subproblems, which can be solved independently and then combined again. MCDA generally consist of a number of steps which breaks down the decision problem into three different components: (1) the alternatives, (2) the criteria for evaluating the performance of the alternatives and (3) the relative importance of the defined criteria. The identification of alternatives and the evaluation criteria constitute the objective part of the method, while the criteria weights for modelling the preference structure of the decision maker is considered the subjective part of the analysis. The purpose of MCDA is not to derive some optimal solution to a problem, but rather to assist the decision maker during an often complicated process of making decisions concerning multiple aspects. Some of the most recognised benefits associated with MCDA include helping the decision maker to understand the decision-making problem in further detail, improve the satisfaction of the decision process itself, improve the quality of the decision and to increase productivity during the decision-making process. There is a wide verity of MCDA tool, however one of the more common tools, which is the tool that this article will focus on, is the Simple Multi-Attribute Ranking Technique (SMART).
What is SMART?
SMART is a MCDM analysis tool based on a linear additive model. The analysis generally consist of eight stages (1) Identification of the decision maker, (2) Identification of alternatives, (3) Identification of relevant evaluation criteria, (4) Numerical assessment of the performance of each alternative on each criterion, (5) Assignment of importance weights for each of the evaluation criterion, (6) Calculation of a weighted average of the values that is assigned each of the alternatives, (7) Provisional decision and (8) Sensitivity analysis and final decision.
Application
1: Identify the decision maker
2: Identification of alternatives
3: Identification of relevant evaluation criteria
4: Numerical assessment of performance of each alternative on each criterion
5: Assignment of relative importance weights for each of the evaluation criterion
6: Calculation of a weighted average of the values that is assigned each of the alternatives
7: Making a provisional decision based on calculated performance scores
8: Sensitivity analysis and final decision
Limitations
Explanation of strengths and weaknesses of the SMART tool.
Annotated bibliography
Edwards, W. and Barron, SMARTS and SMARTER: Improved Simple Methods for Multiattribute Utility Measurement Organizational Behavior and Human Decision Processes, Elsevier
DTU Transport, Multi-criteria decision analysis for use in transport decision making, 2014.
