Appendix 5 The analytical hierarchy process 5.

1 THE BASIC AHP PROCEDURE At the core of the Analytic Hierarchy Process (AHP) lies a method for converting subjective assessments of relative importance to a set of overall scores or weights. The method was originally devised by Saaty.84It has proved to be one of the more widely applied MCA methods, see, for example, Zahedi,85Golden et al.86and Shim87for summaries of applications. However, at the same time, it has attracted substantial criticism from a number of MCA specialists. There have also been attempts to derive similar methods that retain the strengths of AHP while avoiding some of the criticisms. The fundamental input to the AHP is the decision maker's answers to a series of questions of the general form, 'How important is criterion A relative to criterion B?'. These are termed pairwise comparisons. Questions of this type may be used to establish, within AHP, both weights for criteria and performance scores for options on the different criteria. Consider firstly the derivation of weights. It is assumed that a set of criteria has already been established, as discussed in chapters 5 and 6. For each pair of criteria, the decision-maker is then required to respond to a pairwise comparison question asking the relative importance of the two. Responses are gathered in verbal form and subsequently codified on a nine-point intensity scale, as follows:

How important is A relative to B? Equally important Moderately more important Strongly more important Very strongly more important Overwhelmingly more important

Preference index assigned 1 3 5 7 9

2, 4, 6 and 8 are intermediate values that can be used to represent shades of judgement between the five basic assessments. If the judgement is that B is more important than A, then the reciprocal of the relevant index value is assigned. For example, if B is felt to be very strongly more important as a criterion for the decision than A, then the value 1/7 would be assigned to A relative to B. Because the decision maker is assumed to be consistent in making judgements about any one pair of criteria and since all criteria will always rank equally when compared to themselves, it is

only ever necessary to make 1/2n(n - 1) comparisons to establish the full set of pairwise judgements for n criteria. Thus a typical matrix for establishing the relative importance of three criteria might look like:

The next step is to estimate the set of weights (three in the above example) that are most consistent with the relativities expressed in the matrix. Note that while there is complete consistency in the (reciprocal) judgements made about any one pair, consistency of judgements between pairs is not guaranteed. Thus the task is to search for the three wj that will provide the best fit to the 'observations' recorded in the pairwise comparison matrix. This may be done in a number of ways. Saaty's basic method to identify the value of the weights depends on relatively advanced ideas in matrix algebra and calculates the weights as the elements in the eigenvector associated with the maximum eigenvalue of the matrix. For the above set of pairwise comparisons, the resulting weights are:

w1 = 0.751

w2 = 0.178

w3 = 0.070.

The calculations required are quite complex. In practice they would be undertaken by a special AHP computer package. A more straightforward alternative, which also has some theoretical attractions (see below) is to: calculate the geometric mean of each row in the matrix; total the geometric means; and normalise each of the geometric means by dividing by the total just computed. In the example, this would give:

Geometric mean Criterion 1 Criterion 2 Criterion 3 Sum (1 x 5 x 9)1/3 ( 1/5x 1 x 3)1/3

Weight88 3.5568 0.751 0.8434 0.178

( 1/9x 1/3 x 1)1/3 0.3333 0.070 4.7335 (=1.00)

Taken to further decimal points of accuracy, the weights estimated by the two different methods are not identical, but it is common for them to be very close. In computing weights, it is normal to cluster criteria in a value tree (see section 6.2.6). In AHP applications, this allows a series of small sets of pairwise comparisons to be undertaken within segments of the value tree and then between sections at a higher level in the hierarchy. In this way, the number of pairwise comparisons to be undertaken does not become too great. In addition to calculating weights for the criteria in this way, full implementation of the AHP also uses pairwise comparison to establish relative performance scores for each of the options on each criterion. In this case, the series of pairwise questions to be answered asks about the relative importance of the performances of pairs of alternatives in terms of their contribution towards fulfilling each criterion. Responses use the same set of nine index assessments as before. If there are m options and n criteria, then n separate m X m matrices must be created and processed. Although this may seem a daunting task, computer packages such as Expert Choice, and HIPRE 3+ automate most of the computations. Generally, non-specialist users find the pairwise comparison data entry procedures of AHP and related procedures attractive and easy to undertake. With weights and scores all computed using the pairwise comparison approach just described, options are then evaluated overall using the simple linear additive model used for MCDA. All options will record a weighted score, Si, somewhere in the range zero to one. The largest is the preferred option, subject as always to sensitivity testing and other context-specific analysis of the ranking produced by the model. 5.2 CONCERNS ABOUT THE AHP The AHP provides the same benefits as do MCDA models in terms of focusing decision maker attention on developing a formal structure to capture all the important factors likely to differentiate a good choice of an option from a poor one. Pairwise comparisons are generally found to be readily accepted in practice as a means of establishing information about the relative importance of criteria and the relative performance of options. The fact that the pairwise comparison matrix provides some redundant information about relative values allows some cross-checking to be done. Arguably, the resulting weights or scores may be more stable and consistent than if they were based on a narrower set of judgements. AHP also fits comfortably with circumstances where judgements, rather than measurements of performance (say), are the predominant form of input information. Nonetheless, despite these attractions, decision analysts have voiced a number of concerns about the AHP. French89provides a succinct critique; see also Goodwin and Wright. 90The main doubts raised are: (a) The 1 - 9 scale has the potential to be internally inconsistent. A may be scored 3 in relation to B and B similarly scored 5 relative to C. But the 1 - 9 scale means that a consistent ranking of A relative to C (requiring a score of 15) is impossible. (b) The link between the points on the 1 - 9 scale and the corresponding verbal descriptions does not have a theoretical foundation. (c) Weights are elicited for criteria before measurement scales for criteria have been set. Thus the decision maker is induced to make statements about the relative importance of items without knowing what, in fact, is being compared (see section 6.2.10).

(d) Introducing new options can change the relative ranking of some of the original options. This 'rank reversal' phenomenon, first reported by Belton and Gear, 91is alarming and arises from a failure consistently to relate scales of (performance) measurement to their associated weights. (e) Although it is a matter of debate among decision analysts, there is a strong view that the underlying axioms on which AHP is based are not sufficiently clear as to be empirically testable. 5.3 ALTERNATIVES TO AHP A number of attempts have been made to develop MCA procedures that retain the strengths of AHP while avoiding some of the objections. The focus of these efforts has largely been on finding different ways of eliciting and then synthesising the pairwise comparisons. It is beyond the scope of the manual to go into great detail about these developments The best known alternative is REMBRANDT (see Lootsma,92and Olson93). REMBRANDT uses a direct rating system which is on a logarithmic scale to replace the 1 - 9 scale of AHP and exchanges the eigenvector-based synthesis approach for one which is based on use of the geometric mean to identify estimated weights and scores from pairwise comparison matrices. 94A more recent alternative is the MACBETH procedure, outlined in section 5.6.
84

Saaty, T. (1980) The Analytical Hierarchy Process, John Wiley, New York.

85

Zahedi, F. (1986) 'The analytic hierarchy process: a survey of the method and its applications', Interfaces, 16, pp.96-108.
86

Golden, B., Wasil, E. and Harker, P. (eds.) (1989) The Analytic Hierarchy Process: Applications and Studies, Springer Verlag, New York.
87

Shim, J.P.(1989) 'Bibliographical research on the analytic hierarchy process (AHP)' SocioEconomic Planning Sciences, 23, pp.161-7.
88

Weights should sum to one. There is a small rounding error.

89

French, S. (1988) Decision Theory: an Introduction to the Mathematics of Rationality, Ellis Horwood, Chichester, pp. 359-361.
90

Goodwin, P. and Wright, G. (1998) Decision Analysis for Management Judgement, second edition, John Wiley, Chichester.
91

Belton, V,. and Gear, T. (1983) 'On a short-coming in Saaty's method of analytic hierarchies', Omega, 11, pp.228-30.
92

Lootsma, F.A. (1992) The REMBRANDT System for Multi-criteria Decision Analysis via Pairwise Comparisons or Direct Rating, Report 92-05, Faculty of Technical Mathematics and Informatics, Delft University of Technology, The Netherlands.
93

Olson, D. (1996) Decision Aids for Selection Problems, Springer Verlag, New York. For succinct critiques see French, pp. 359-361, and Goodwin and Wright, pp. 394-397.

94