Evaluation

Weights for
Multi-Criteria
Decision-Making
Problems
Dr. Basma Ezzat
 Classification of Weighting
Methods
Subjective Objective
➢Role of assigning the importance to the ➢Decision Maker has no role in determining
criteria is put on the shoulders of the the importance of the criteria .
decision maker.

➢Expert has to assign based on previous ➢Useful when Decision maker is nonexistent
experience

➢Constraints of design or designer ➢Relatively Subjective weights cannot be

preference obtained

➢Example: Pair-wise comparison (i.e. AHP

➢Example: Entropy Method
“Analytical Hierarchy Process”)
Multi-Criteria
Decision
Making
Entropy METHOD
 Steps of Entropy Method
➢ Step 1: Construct normalized decision matrix.
𝒙𝒊𝒋
𝒑𝒊𝒋 = σ
𝒊 𝒙𝒊𝒋

➢Step 2: Calculate the entropy value of each column

− σ𝒊 𝒑𝒊𝒋 𝒍𝒐𝒈 𝒑𝒊𝒋
𝑬𝒋 =
𝒍𝒏(𝒏)
◦ where 𝐸𝑗 is the entropy of column 𝑗, 𝑝𝑖𝑗 is the normalized value of element 𝑖 in column 𝑗, and log is the
natural logarithm.
 Steps of Entropy Method
➢ Step 3: Calculate the weights of each criterion based on its
relative entropy value.
(𝟏 − 𝑬𝒋 )
𝒘𝒋 = σ𝒎
𝒋=𝟏(𝟏 − 𝑬𝒋 )
Multi-Criteria
Decision
Making
AHP METHOD
 Analytic Hierarchy
Process(AHP)
➢ The Analytic Hierarchy Process (AHP) is a structured
technique for organizing and analyzing complex decisions.

➢ It was developed by Thomas L. Saaty in the 1970s.

➢ Application in group decision making

7
 Analytic Hierarchy
Process (Cont.)
Wide range of applications exists:
➢ Selecting a car for purchasing

➢ Deciding upon a place to visit for vacation

➢ Deciding upon an MBA program after graduation.

8
 General Idea

➢ AHP algorithm is basically composed of two steps:

❑ Determine the relative weights of the decision criteria
❑ Determine the relative rankings (priorities) of alternatives

➢ Both qualitative and quantitative information can be

compared by using informed judgments to derive weights
and priorities.
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 Example: Car Selection

➢ Objective
❑ Selecting a car
➢ Criteria
❑ Style, Reliability, Fuel-economy Cost?
➢ Alternatives
❑ Civic Coupe, Saturn Coupe, Ford Escort, Mazda Miata

1
0
 Hierarchy tree
Selecting
a New Car

Style Reliability Fuel Economy

Civic Saturn Escort Miata

Alternative courses of action
1
Ranking Scale for Criteria
and Alternatives

8
 Pairwise Comparisons
➢Used to score each alternative
on a criterion Preference Level Numerical Value
Equally preferred 1
➢Compare two alternatives Equally to moderately preferred 2
according to a criterion and Moderately preferred 3
indicate the preference using a Moderately to strongly preferred 4
preference scale Strongly preferred 5

➢Standard scale used in AHP Strongly to very strongly preferred 6

Very strongly preferred 7
Very strongly to extremely preferred 8
Extremely preferred 9
 Ranking of criteria

Style Reliability Fuel Economy

Style 1 1/2 3

Reliability 2 1 4

Fuel Economy 1/3 1/4 1

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 Ranking of priorities
➢ Consider [Ax =𝜆𝑚𝑎𝑥 x] where
❑ A is the comparison matrix of size n*n, for n criteria,
also called the priority matrix.
❑ x is the Eigenvector of size n*1, also called the
priority vector.
❑ 𝜆𝑚𝑎𝑥 is the Eigenvalue.
 Ranking of priorities

➢ To find the ranking of priorities, namely the Eigen Vector X:

❑ Normalize the column entries by dividing each entry by the
sum of the column.
❑ Take the overall row averages.

Row
Normalized 0.30 0.28 0.37
1 0.5 3 ColumnSums
averages 0.32
A= 2 1 4 0.60 0.57 0.51 X= 0.56
0.33 0.25 1.0 0.10 0.15 0.12 0.12
Priority vector
Column sums 3.33 1.75 8.00 1.00 1.00 1.00
 Criteria weights
➢ Style .32
➢ Reliability .56
➢ Fuel Economy .12
Selecting a New Car
1.00

Style Reliability Fuel Economy

0.32 0.56 0.12
 Checking for Consistency

➢ The next stage is to calculate a Consistency Ratio (CR) to

measure how consistent the judgments have been relative to
large samples of purely random judgments.

➢ AHP evaluations are based on the aasumption that the

decision maker is rational, i.e., if A is preferred to B and B is
preferred to C, then A is preferred to C.
 Checking for Consistency
➢If the CR is greater than 0.1 the judgments are
untrustworthy because they are too close for comfort to
randomness and the exercise is valueless or must be
repeated.
 Calculation of Consistency
Ratio
➢ The next stage is to calculate 𝜆𝑚𝑎𝑥 so as to lead to the Consistency
Index and the Consistency Ratio.
➢ Consider [Ax = 𝜆𝑚𝑎𝑥 x] where x is the Eigenvector.
A x Ax x

1 0.5 3 0.32 0.98 0.32

0.56 1.68 = 0.56
2 1 4 = max
0.12 0.36 0.12
0.333 0.25 1.0

➢𝜆𝑚𝑎𝑥 = average{0.98/0.32, 1.68/0.56, 0.36/0.12}=3.04

➢Consistency index , CI is found by CI = (𝝀𝒎𝒂𝒙 -n)/(n-1) = (3.04-3)/(3-1) = 0.02
 Calculation of Consistency
Ratio
n 2 3 4 5 6 7 8 9 10
Degree of Consistency
RI 0 0.52 0.88 1.12 1.24 1.32 1.41 1.45 1.51

➢ If CI=0, there would a perfectly consistent decision maker

➢ Determine the inconsistency degree
➢ Determined by comparing CI to a Random Index (RI)
➢ RI values depend on n
➢ Degree of consistency (CR) = CI/RI
➢ IF CR < 0.1, the degree of consistency is acceptable
➢ Otherwise AHP is not meaningful
 Calculation of Consistency
Ratio
n 2 3 4 5 6 7 8 9 10
Degree of Consistency
RI 0 0.52 0.88 1.12 1.24 1.32 1.41 1.45 1.51

C.R. = C.I./R.I. where R.I. is the random index

C.I. = 0.02 n=3 R.I. = 0.52 (from table)

So, C.R. = C.I./R.I. = 0.02/0.52 = 0.04

C.R. ≤ 0.1 indicates sufficient consistency for decision.

 Ranking alternatives
Style Priority vector
Civic Saturn Escort Miata
Civic 1 1/4 4 1/6 0.13
Saturn 4 1 4 1/4 0.24
Escort 1/4 1/4 1 1/5 0.07
Miata 6 4 5 1 0.56
 Ranking alternatives
Reliability
Priority vector
Civic Saturn Escort Miata
Civic 1 2 5 1 0.38
Saturn 1/2 1 3 2 0.29
Escort 1/5 1/3 1 1/4 0.07
0.26
Miata 1 1/2 4 1

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 Ranking alternatives
Fuel Economy Miles/gallon Priority Vector

Civic 34 .30
Saturn 27 .24
Escort 24 .21
Miata 28 .25
113 1.0
Since fuel economy is a quantitative measure, fuel
consumption ratios can be used to determine the relative
ranking of alternatives.
 Ranking alternatives
Selecting a New Car
1.00

Style Reliability Fuel Economy

0.32 0.56 0.12

Civic 0.13 Civic 0.38 Civic 0.30

Saturn 0.24 Saturn 0.29 Saturn 0.24
Escort 0.07 Escort 0.07 Escort 0.21
Miata 0.56 Miata 0.26 Miata 0.25
 Ranking alternatives

Reliability

Economy
Style

Fuel
Civic .13 .38 .30 .32 .28
Saturn .24 .29 .24 .25
x .56 =
Escort .07 .07 .21 .07
Miata .56 .26 .25 .12 .34

Priority matrix Criteria Weights

 Including Cost as a Decision
Criteria
➢ Adding “cost” as a a new criterion is very difficult in AHP.

➢ A new column and a new row will be added in the

evaluation matrix.

➢ However, whole evaluation should be repeated since

addition of a new criterion might affect the relative
importance of other criteria as well!
 Including Cost as a
Decision Criteria
➢ Instead one may think of normalizing the costs directly
and calculate the cost/benefit ratio for comparing
alternatives!
Normalized Cost/Benefits
Cost Cost Benefits Ratio
• CIVIC $ 12k .22 .28 0.78
• SATURN $15K .28 .25 1.12
• ESCORT $9K .17 .07 2.42
• MIATA $18K .33 .34 0.97
 Including Cost as a
Decision Criteria
➢ The “ESCORT” Is the winner with the highest benefit to COST RATIO
and we rank it 1st ,
➢ Then at 2nd position Saturn,

➢ At 3rd Miata,

➢ At 4th Civic.
 AHP Advantages
➢ It allows multi criteria decision making.

➢ It is applicable when it is difficult to formulate criteria

evaluations, i.e., it allows qualitative evaluation as well as
quantitative evaluation.

➢ It is applicable for group decision making environments

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 AHP Disadvantages
➢ There are hidden assumptions like consistency.
➢ Repeating evaluations is cumbersome.

➢ Difficult to use when the number of criteria or alternatives

is high, i.e., more than 7.

➢ Difficult to add a new criterion or alternative

➢ Difficult to take out an existing criterion or alternative, since the

best alternative might differ if the worst one is excluded.