Multiple Criteria Decision Making:

Analytic Hierarchy
Process
Introduction
The AHP was developed by Thomas L Saaty
Its a powerful tool for complex decision making process
3 basic functions of AHP:
Structuring complexity using hierarchies
Measurements on a ratio scale
Synthesis

Steps in AHP
Define the problem
Structure a hierarchy representing the problem. Arrange goals,
attributes, criteria, sub-criteria, issues, activities, alternatives, etc in
a hierarchy
Perform pairwise comparison judgment on elements at each level of
the hierarchy with respect to another element higher up the
hierarchy. This process produces a series of pairwise comparison
matrices at each level of hierarchy
Compute local weights of the elements at each level with respect to
an element higher up the hierarchy. Check for inconsistencies,
revise the pairwise comparison if necessary
Use hierarchical composition to combine the weights to obtain the
global weights for the alternatives
Review the model and repeat any part as required

Priority or preference weight
Degree of importance or priority is expressed in terms of
weight
The weights are usually normalized
sum weights = 1
Suppose we have n alternatives or criteria to compare,
we seek a vector w = [w
1
, w
2
, , w
n
]
T

Pairwise comparison matrix
Suppose we have n items to compare, the pairwise comparison
reciprocal matrix,






Matrix A must satisfied the followings to be valid:
The entries of A must be positive
The matrix A is reciprocal matrix with a
ij
= a
ji
-1
for all i, j
The diagonal elements of A are always one, i.e. a
ii
= 1, for all i

| |
j
i
ij
ij
nn n n
n
n
w
w
a
a
a a a
a a a
a a a
A
=
=
(
(
(
(

=
element each
2 1
2 22 21
1 12 11

Pairwise comparison matrix (contd)

Input requirements to construct the A-matrix:
In general, given n objects, n(n-1)/2 number of comparisons are
needed
Perfectly consistent A-matrix
A perfectly consistent pairwise comparison matrix is a valid A-
matrix such that
(
(
(
(

=
= =
1
6
1
3
1
6 1 2
3
2
1
1
and all for
A
Example
k i,j, a a
a
a
a
kj ik
jk
ik
ij
Relation between A and w
Given perfectly consistent matrix A,

0 ) (
2
1
2
1
2 1
1
2
1
1
1
2
1
2 1
2 22 21
1 12 11
=
=
=
(
(
(
(

=
(
(
(
(

(
(
(
(
(

=
(
(
(
(

(
(
(
(

=
w nI A
nw Aw
nw
nw
nw
nw
w
w
w
w
w
w
w
w
w
w
w
w
w
w
w
w
w
w
a a a
a a a
a a a
Aw
n n
n
n n n
n
n nn n n
n
n

Computing w when A is given

If A is perfect pairwise comparison matrix, then w may be computed
by normalizing any column of A, i.e.



But usually A is imperfect since its based on human judgment
The best estimate for w can be estimated from the relation (A-
I)w=0 where is a constant that is approximately equal to n
But from linear algebra, and w are the eigenvalue and eigenvector
of A respectively
It can be shown that a positive reciprocal matrix has only one real
dominant eigenvalue which shall be denoted as
max
j
a
a
w
n
k
kj
ij
i
any for
1

=
=
Example
Consider the matrix A which is imperfect





Find the value of and w!

(
(
(

=
1 3 / 1 2
3 1 3
2 / 1 3 / 1 1
A
The scale of pairwise comparison
Saatys intensity of importance scale
The Consistency Index(CI)
Errors or inconsistency in judgments cannot be totally avoided
However, we must ensure that A-matrix do not contain too much
inconsistencies
Define CI of matrix A as



Note that actually CI is a measure of inconsistency (not
consistency)

1
max

=
n
n
CI

The CI and the 10% rule
Consider a positive reciprocal matrix of size n>2 whose entries are
randomly selected from the 9-point scale
These matrices are those with the highest inconsistency
The average CI values for these matrices are called Random
Indices (RI) and are given below
The CI and the 10% rule (contd)
Define Consistency Ratio (CR) of A to be:




The 10% Rule of Practice:
A matrix with CR 0.1 is typically considered acceptable
If CR > 0.1, there is a need to reassess some of the entries to
reduce the level of inconsistencies
n size for RI
A of CI
CR =
Improving consistency of pairwise
comparisons
If an A-matrix has CR >> 0.1, then we need to fix it
1. Check for any clerical errors
Also check the reciprocity property
2. Check for homogeneity
3. Check for unintentional violation of transitivity
4. Check for local consistency
Identify element that contributes the most to the overall
inconsistency
Two measures of error can be computed for each a
ij







error no for 0 | |
error no for 1

ij ij
= =
= =
c c
i j ij
ij
i
j ij
ij
w w a
e
w
w a
e
Approximate computation
methods
When n is large and there is no suitable computing
facility is available to do a full eigenvalue and vector
computation, it is possible to get a good approximation
to the weights
Known approximation methods:
Row Geometric Mean Method
Column Normalization Method
Row Geometric Mean Method
Procedure:
Compute the geometric mean of each row of A
Normalize the numbers obtain in Step 1 to obtain w
An approximate value of is obtained by finding the product of
any i
th
row of A and the column vector w and then dividing by w
i

Justification:
Given the following nn A-matrix:


The geometric mean of the ith row i
(
(
(
(

n n n n
n
n
w w w w w w
w w w w w w
w w w w w w

2 1
2 2 2 1 2
1 2 1 1 1
constant
2 1
2 1
= = = = K Kw
w w
w
w
w
w
w
w
w
i
n
w
i
n
n
i i i
i
n

Row Geometric Mean Method
(contd)
By normalizing the i, we can retrieve the values of wi
Note that if the original A-matrix is completely consistent,
this method gives the exact weights
Step 3 computes since (Aw = w) = [Aw]
i
/w
i
for
any i, where [Aw]
i
is simply the product of the i
th
row of A
and the column vector w. an estimate of is given by
i any for
1
i
n
j
j ij
w
w a

=
Example
Column normalization method
Procedures:
Normalize each column in the A-matrix
Compute the averages across each row of the matrix
to obtain w
Estimate as in the row GM method using all the
rows of A and compute the average
Example
Comparison among methods
Exact method
(eigenvector)
Geometric Mean
Method
Column
Normalization
Method
w
1
0.1571 0.1571 0.1593
w
2
0.5936 0.5936 0.5889
w
3
0.2493 0.2493 0.2518
3.0536 3.0536 3.0539
Geometric Mean Method provides better results than the column
normalization method
The AHP procedure:
constructing the hierarchy
Job selection problem:






Level 1: goal
Level 2: criteria that contribute towards achievement of
the goal in level 1
Level 3: the alternatives under consideration
Constructing hierarchy (contd)
Performing the judgments and
computing the local weights
Perform pairwise comparison of level 2 elements with respect to
level 1, i.e. evaluate the contributions of each of the six criteria
towards achieving the goal Job satisfaction





Compute
max
and w

max
= 6.42, CI = 0.084069, CR= 0.067797
w = [0.158408 0.189247 0.197997 0.04831 0.150245 0.255792]


Performing the judgments and
computing the local weights
Perform pairwise comparison of level 3 elements (i.e.
the alternative jobs) with respect to each of the six
criteria in level 2

Summary
Choose company A
General hierarchies
Tree
hierarchy
Tree hierarchy: example
We pairwise compare the 6 criteria with respect to the goal and
obtain the same weights as before
The two subcriteria with respect to growth:
Tree hierarchy: example (contd)
Tree hierarchy: example (contd)
Tree hierarchy: example (contd)
Result:
Job A, global weight = 0.452
Job B, global weight = 0.296
Job C, global weight = 0.252
The rating approach
To evaluate or rank a very large number of alternatives or subjects,
i.e. evaluating employees in a company
A hierarchy is developed in the usual way down to the level of
criteria or sub-criteria
The criteria are prioritized in the usual way and their weights
expressed in distributive form
Each of the leaf criteria or sub-criteria is then given set of intensity
ratings, such as excellent, good, average, etc.
The type and number of intensity ratings for each criterion may be
different
These ratings are then prioritized by pairwise comparisons to
determine their relative importance with respect to the measured
criteria the weights are expressed in ideal form
Alternatives are independently evaluated
Example: evaluation of employees
Example: evaluation of employees
In ideal form
Example: evaluation of employees
Example: evaluation of employees
Rank reversal
Consider the following example:

Note:
The rank is
reversed
although we did
not revise the
relative
weights!!
Why does tank reversal occur?
Rank reversal is not unique to AHP as it is not because of the
eigenvector computations, because of the 9-point scale, nor
because of inconsistency in judgments

Rank reversal can take place with any technique that decomposes
and synthesizes in a relative fashion, regardless of whether it uses
pairwise comparisons, eigenvector calculations, or demand perfect
consistency

Rank reversal occurs because of an abundance or dilution effect (or
what has also been called a substitution effect). Value or worth is,
more often than not, affected by relative abundance or scarcity
When should rank reversal be allowed?
If the system is a closed system where a fixed amount of
resources to be distributed, then the distributive
synthesis is appropriate and rank reversal should be
allowed
This is called the distributive mode of AHP
If the system is an open system where resources can be
added or removed, then ideal synthesis is appropriate
and rank reversal will not happen
This is called the ideal mode of AHP
Try the previous example using ideal mode! no rank
reversal
Expert choice supports both distributive and ideal mode