MULTICRITERIA

DECISION
MAKING
THREE TECHNIQUES
1. Goal Programming
2. Analytical Hierarchy Process
3. Scoring Model
Goal programming
 Is a variation of linear programming in that it considers more than
one objective (called goals) in the objective function

 Set up in the same general format as linear programming models,

with an objective function.
 
Model formulation:
Maximize z = $40 + 50
Subject to
+ 2 ≤ 40 hr. Of labor
4 + 3≤ 120 lb. Of clay
≥
Where
= number of bowls produced
= number of mugs produced
The beaver creek pottery company other objectives, listed in order of importance:
1. To avoid layoffs, the company does not want to use fewer than 40 hours of labor
per day.
2. The company would like to achieve a satisfactory level of $1,600 per day.
3. Because the clay must be stored in a special place so that it does not dry out,
the company prefers not to keep more than 120 pounds on hand each day.
4. Because high overhead costs result when the plant is kept open past normal
hours, the company would like to minimize the amount of overtime.
 
Labor goal
The first goal of the pottery company is to avoid underutilization of labor – that
is, fewer than 40 hours of labor each day.

Model constraint Goal constraint

+ 2 ≤ 40 hr. Of labor + 2 + - = 40 hr.

 A positive deviational variable () is the amount by which a goal level is exceeded.

 A negative deviational variable () is the amount by which a goal level is
underachieved.
 Goal programming objective function
Labor goal
Minimize
= first-priority goal

Minimize ,
= fourth-priority goal

 The objective function in goal programming model seeks to minimize the

deviation from goals in order of the goal priorities.
 
Profit goal
The second is to achieve a daily profit of $1,600.

Z = $40 + 50 $40 + 50 + - = $1,600

Profit goal objective function:

Minimize , ,
 
Material goal
The third goal is to avoid keeping more than 120 pounds of clay on hand each
day.

4 + 3≤ 120 lb. Of clay 4 + 3 - = 120 lb.

Material goal objective function:

Minimize , ,,
 
The complete goal programming model as follows:

minimize , ,,
subject to
+ 2 + - = 40
40 + 50 + - = 1,600
4 + 3 - = 120
,, , , ≥ 0
The Analytical Hierarchy Process
 Is a method for ranking decision alternatives and selecting the best one given
multiple criteria
Pairwise comparison
 Two alternatives are compared according to a criterion and one is preferred.
Preference Scale
 A preference scale assigns numeric values to different levels of preference.
Synthesization
 In Synthesization, decision alternatives are prioritized within each criterion.
Analytical Hierarchy Process Consistency
 A consistency index measures the degree of inconsistency in pairwise
comparisons.
SCORING MODEL
 Is a method similar to AHP, but it is mathematically simpler.

 There are several versions of scoring models.

The decision criteria are weighted in terms of their relative performance, and
each decision alternative is graded in terms of how well it satisfies the criteria.
Five criteria in the problem example:
1. Proximity of schools and colleges
2. Area median income
3. Mall vehicle traffic flow and parking
4. Quality and size(in terms of number of stores in the mall)
5. Proximity of other malls or shopping areas