Information Sciences 177 (2007) 15671582

www.elsevier.com/locate/ins

A two phase multi-attribute decision-making approach for

new product introduction
Cengiz Kahraman a, Gulcin Buyukozkan

b,*

, Nufer Yasin Ates

Istanbul Technical University, Department of Industrial Engineering, Macka 34367, Istanbul, Turkey
Galatasaray University, Department of Industrial Engineering, Ciragan Caddesi No. 36, Ortakoy 34357, Istanbul, Turkey
Received 6 September 2006; accepted 7 September 2006

Abstract
This study aims at improving the quality and eectiveness of decision-making in new product introduction. New product development has long been recognized as one of the corporate core functions to be competitive on an increasingly competitive global market. However, developing new products is a process involving risk and uncertainty. In order to solve this
stochastic problem, companies need to evaluate their new product initiatives carefully and make accurate decisions. For
this reason, a systematic decision process for selecting more rational new product ideas is proposed. Basically, two stages of
decision-making are described: the identication of nondominated new product candidates and the selection of the best
new product idea. These stages are composed of an integrated approach based on a fuzzy heuristic multi-attribute utility
method and a hierarchical fuzzy TOPSIS method. Finally, an application is given to demonstrate the potential of the
methodology.
 2006 Published by Elsevier Inc.
Keywords: New product idea selection; Fuzzy sets; Heuristics; Multi-attribute utility function; TOPSIS method

1. Introduction
In an increasingly competitive global market, companies must be better at developing new products. New
product development (NPD) has long been recognized as one of the corporate core functions. Particularly for
the companies with short product life cycles, it is important to develop new products and new product platforms that fulll reasonable demands on quality, performance, and cost quickly and safely.
NPD which translates an idea into a tangible physical asset is structured around well-dened phases.
Each phase encloses many decision points, where management decides about the future of the project
[26]. One of the most critical decisions when managing NPD projects is the new product idea selection
[1,4]. Several researchers conclude that it is dicult for managers to end the NPD projects once they are

Corresponding author. Tel.: +90 212 227 4480; fax: +90 212 259 5557.
E-mail address: gbuyukozkan@gsu.edu.tr (G. Buyukozkan).

0020-0255/$ - see front matter  2006 Published by Elsevier Inc.

doi:10.1016/j.ins.2006.09.008

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C. Kahraman et al. / Information Sciences 177 (2007) 15671582

begun [12,35]. This is the main motivation of this study, which focuses on making an ecient new product
idea selection.
Similar to all decision problems, NPD decisions contain considerable amount of uncertainty causing elements, which confuse the decision-maker to reach the targeted performance [2,33]. Uncertainty arises from
both internal and external multiple sources including technical, management, and commercial issues. Thus,
it is critical to use a structured approach that can minimize the risks of NPD projects. To help consumers
and decision-makers easily express their judgments, the linguistic variables should be used to evaluate the
importance of customer needs and ratings of new product alternatives. The fuzzy set theory is a useful tool
for this aim. In this article, we propose an integrated approach with two phases based on a fuzzy heuristic
multi-attribute utility method and the hierarchical fuzzy TOPSIS method to make more rational selection
decisions. The rst phase of our approach evaluates all the alternatives to eliminate the alternatives clearly
dominated by the others. The second phase involves a more detailed analysis to select the best one among
the remaining nondominated alternatives. We also present an industrial application to demonstrate the potential of this integrated approach.
The rest of the paper is organized as follows. The next section presents an overview of the decision-making
techniques used in a NPD process. The details of the proposed integrated approach are given in Section 3. An
application of the approach is described in Section 4 through a case study. Finally, the last section contains
some concluding remarks and possible perspectives.
2. An overview for new product decision methods
NPD has a vast working area and it addresses dierent strategic, tactic, and operational managerial levels
in the organization. Although dierent organizations can make dierent choices and may use dierent methods, all of them make decisions about a collection of issues such as the product concept, architecture, conguration, procurement, distribution arrangements, and project schedule, etc. Consequently, NPD can be
dened as a process including many generic decision points, where each of them must be evaluated, selected,
and prioritized. While considering the decision points in the whole NPD process, numerous decision tools and
techniques have been developed to assist managers in making better screening decisions in an uncertain environment [10,11,1315,19,22,23,28,36,38,39]. Some of them may be classied in that way: Probabilistic models
[37], Options pricing theory [18], Scoring models and checklists [20,32], Behavioral approaches [37], Analytical
hierarchy process [43], Sensitivity analysis [34], and Fuzzy logic [19]. These techniques can be used exclusively
or in a hybrid way. In this study, we propose a two phase integrated decision-making approach based on fuzzy
heuristic multi-attribute utility and hierarchical fuzzy TOPSIS methods as given in Fig. 1. The decision-makers
are actively involved in the decision process of the proposed approach. For example, heuristic information is
obtained through a question and answer system, where a dialogue between the decision-makers and the analysts takes place, and the decision rules are constructed through serious discussions between the decision-makers and the analysts. In the following, this two phase approach is presented.
3. A two phase approach for selection among new product ideas
3.1. Heuristic multi-attribute utility function approach
One of the basic principles of the classical economic theory is that decision-makers behave as prot maximizers. According to this principle, the problem of NPD could be adequately modeled by the maximization of
single-objective models. Real-life observations refute this simplication. Expected utility theory (EUT) was a
rst step in the direction of broadening the prot maximizer assumption and including higher moments of the
expected prot. However, EUT has been criticized for limiting its application to a single attribute: the pay-o
(or wealth). Many authors have shown the complexity of the NPD decision-making process through empirical
studies that have demonstrated that they consider more than one attribute in their utility functions [3,4,33]. All
the related studies suggest that NPD decision-making processes are driven by various criteria, usually conicting ones, related to their economic, social, and cultural environment situation, in addition to the expected
prot.

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1569

INITIALIZATION PHASE
1. Identify the interest groups of people in the decision environment

2. Identify the new product evaluation attributes and establish a universe

of discourse for each of them.

3. List all alternatives to be evaluated.

PHASE I
4. Interact with decision makers to identify their heuristics and according
to them, construct heuristic decision rules for each group.

5. List the selected most appropriate alternatives and measure along the
attributes.

PHASE II
6. Identify the weights of main and sub evaluation criteria with respect to
goal and main criteria respectively.

7. Obtain the scores for selected alternatives in phase I with respect to

each sub evaluation criterion.

8. Use the Hierarchical FuzzyTOPSIS Algorithm to obtain the relative

closeness to ideals.

9. Rank the alternatives from the best to the worst and select the best new
product idea for the company.

Fig. 1. The proposed approach.

Recognizing the convenience of including several objectives to simulate evaluator or decision-maker behavior, we resort to Multi-attribute utility theory (MAUT), an approach largely developed by Keeney and Raia
[25], in order to overcome the limitations of the single-attribute utility function. The aim of MAUT is to
reduce a decision problem with multiple criteria to a cardinal function that ranks alternatives according to
a single criterion. Thus, the utilities of n attributes from dierent alternatives are captured in a quantitative
way via a utility function represented mathematically as U = U(r1, r2, . . . , rn), where U is the Multi-attribute
utility function (MAUF) and rj is the attribute j. The level of achievement of each attribute can usually be
expressed mathematically as a function of the decision variables. Thus, decisions under MAUT are made
by maximizing U and responding to the set of objectives that are simultaneously aimed at by the decisionmaker.

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A heuristic method is an algorithm that gives only an approximate solution to a given problem. Sometimes
we are not able to formally prove that this solution actually solves the problem, but heuristic methods are
commonly used because they are much faster than exact algorithms. In addition, this is a software-based strategy, which is therefore relatively cheap and available to any researcher. Efstathiou and Rajkovic [16] and
Efstathiou [17] argued that the MAUF could not be practically obtained by the combination of single-attribute utility functions because of the dependency among attributes. Therefore a heuristic approach is needed to
dene the MAUF [6]. Since decision data may be numerically and/or linguistically expressed, the fuzzy set
theory must be incorporated in this heuristic approach. The utility function is represented then in the
IF . . . THEN . . . decision rule format.
3.2. Hierarchical fuzzy TOPSIS methodology
3.2.1. Fuzzy TOPSIS
TOPSIS (Technique for order preference by similarity to ideal solution) views a multi-attribute decisionmaking problem with m alternatives as a geometric system with m points in the n-dimensional space. It
was developed by Hwang and Yoon [21]. The method is based on the concept that the chosen alternative
should have the shortest distance from the positive-ideal solution and the longest distance from the negative-ideal solution. TOPSIS denes an index called similarity (or relative closeness) to the positive-ideal solution and the remoteness from the negative-ideal solution. Then the method chooses an alternative with the
maximum similarity to the ideal solutions [41].
In the last 15 years, some fuzzy TOPSIS methods were developed in the literature. Table 1 gives the comparison of these fuzzy TOPSIS methods. The comparison includes the computational dierences among the
methods.
This study is based on the Chen and Hwangs [6] fuzzy TOPSIS method since the other fuzzy TOPSIS
methods are derived from this method with minor dierences. In the following, the steps of fuzzy TOPSIS
developed by Chen and Hwang [6] are given. First, a decision matrix, D, of m n dimension is dened as
in Eq. (1).
A1

X1  Xj
x11    x1j

6
6 ..
6.
6
6
D Ai 6
6 xi1
6
.. 6 .
.
. 6
4.



Am



..
.

..
.

xm1

xij
..
.
xmj

 Xn
3
   x1n
7
.. 7
. 7
7
7
   xin 7
7
7
.. 7
. 7
5

   xmn

where xij " i, j may be crisp or fuzzy. If xij is fuzzy, it is represented by a trapezoidal number as xij = (aij, bij,
cij, dij) shown in Fig. 2. The fuzzy weights can be described by Eq. (2).
~ j aj ; bj ; vj ; dj
w

Algorithm. The problem is solved using the following steps.

Step 1. Normalize the decision matrix. The decision matrix must rst be normalized so that the elements are
unit-free. To avoid the complicated normalization formula used in classical TOPSIS, we use linear
scale transformation as follows:
(
xij =xj 8j ; xj is a benefit attribute
rij
3
x
8j ; xj is a cost attribute
j =xij

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1571

Table 1
Comparison of fuzzy TOPSIS methods
Source

Attribute
weights

Type of fuzzy
numbers

Ranking method

Normalization
method

Chen and
Hwang [6]
Liang [29]

Fuzzy
numbers
Fuzzy
numbers
Fuzzy
numbers
Fuzzy
numbers
Crisp values

Trapezoidal

Lee and Lis [27] generalized mean method

Trapezoidal

Chens [7] ranking with maximizing set and minimizing set

Linear
normalization
Manhattan distance

Triangular

Triangular

Chen [5] assumes the fuzzy positive and negative ideal

solutions as (1, 1, 1) and (0, 0, 0), respectively
Liou and Wangs [30] ranking method of total integral value
with a = 1/2
Zhao and Govinds [45] center of area method

Triangular

Kaufmann and Guptas [24] mean of the removals method

Triangular

Chens [5] fuzzy positive and negative ideal solutions: as

(1, 1, 1) and (0, 0, 0), respectively

Chen [5]
Chu [8]
Tsaur et al.
[40]
Chu and Lin
[9]
Zhang and Lu
[44]

Triangular

Fuzzy
numbers
Crisp values

(x )
1.0
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0

wj

xij

j
aij

bij

Linear
normalization
Modied
Manhattan distance
Vector
normalization
Linear
normalization
Manhattan distance

j
cij

d ij

Fig. 2. Trapezoidal fuzzy numbers.

In the formula above xj and x

j represent the largest and the lowest scores, respectively. By applying
Eq. (3), we can rewrite the decision matrix in Eq. (1) as in Eq. (4).
A1
..
.
D0 A i
..
.

2 X1 
r11   
6.
6 ..
6
6
6 ri1   
6
6.
6.
4.

Am

rm1



Xj
r1j
..
.
rij
..
.
rmj

 Xn 3
   r1n
.. 7
. 7
7
7
   rin 7
7
.. 7
7
. 5

   rmn

When xij is crisp, its corresponding rij must be crisp; when xij is fuzzy, its corresponding rij must be
fuzzy. Eq. (3) is then replaced by the following fuzzy operations. Let xij aij ; bij ; cij ; d ij ; x
j
 

 



a
j ; bj ; cj ; d j and xj aj ; bj ; cj ; d j , we have


8
a
b
c
d
>
< xij xj dijj ; cij ; bijj ; aij
j
j
rij
5
    
>
: x xij ai ; bi ; ci ; d i
j
d ij cij bij aij
Step 2. Obtain the weighted normalized decision matrix. This matrix is obtained using
vij rij wj

8j ; j

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C. Kahraman et al. / Information Sciences 177 (2007) 15671582

When both rij and wij are crisp, vij is crisp; while when either rij or wij (or both) are fuzzy, Eq. (6) may
be replaced by the following fuzzy operations:
!
aij bij
cij d ij
vij rij wj
aj ;  bj ;  vj ;  dj
7
d j
cj
bj
aj
 

ai
b
c
d
i
i
i
aj ; bj ; vj ; dj
8
vij rij wj
d ij
cij
bij
aij
Eq. (7) is used when the jth attribute is a benet attribute. Eq. (8) is used when the jth attribute is a
cost attribute. The result of Eqs. (7) and (8) can be summarized as in Eq. (9).
2 X1 
A1 v11   
.. 6
6.
. 6 ..
6
v Ai 6
6 vi1   
.. 6
6.
. 4 ..
Am vm1   

Xj
v1j
..
.
vij
..
.

 Xn 3
   v1n
.. 7
7
. 7
7
   vin 7
7
.. 7
7
. 5

vmj



vmn

Step 3. Obtain the positive ideal solution (PIS), A*, and the negative ideal solution (NIS). PIS and NIS are
dened as
A v1 ; . . . ; vn ;

10


A v
1 ; . . . ; vn ;

11



where vj maxi vij and v
j mini vij . For crisp data, vj and vj are obtained straightforwardly. In case


of fuzzy data, vj and vj may be obtained through some ranking procedures. Chen and Hwang [6] use
Lee and Lis ranking method [27] for comparison of fuzzy numbers. The vj and v
j are the fuzzy numbers with the largest generalized mean and the smallest generalized mean, respectively. The generalized
mean for fuzzy number vij 8j is dened as

Mvij

a2ij  b2ij c2ij d 2ij  aij bij cij d ij

3aij  bij cij d ij 

12

For each column j, we nd a vijwhose greatest mean is vj and lowest mean is v
j .
Step 4. Obtain the separation measures S i and S 
i . In the classical case, separation measures are dened as
n
X
Dij ; i 1; . . . ; m
13
S i
j1

and,
S
i

n
X

D
ij ;

i 1; . . . ; m

14

j1

For crisp data, the dierence measures Dij and D

ij are given as
Dij jvij  vj j

15


D
ij jvij  vj j

16

The computation is straight forward. For fuzzy data, the dierence between two fuzzy numbers lvij x
and lvj x (based on Zadehs study [42]) is explained as given in Eq. (17).
^

Dij 1  fsupblvij x lvj xcg 1  Lij

x

8i; j

17

C. Kahraman et al. / Information Sciences 177 (2007) 15671582

(x)

vj*

vij

1.

1573

Lij

x
Fig. 3. The derivation of Lij.

where Lij is the highest degree of similarity of vij and vj . The value of Lij is depicted in Fig. 3. Similarly,
the dierence between lvij x and lvj x is dened as
^

D
xcg 1  Lij
ij 1  fsupblvij x lv
j

8i; j

18

Note that both Dij ; D

ij are crisp numbers.
Step 5. Compute the relative closeness to ideals. This index is used to combine S i and S 
i indices calculated in
Step 4. Since S i and S 
are
crisp
numbers,
they
can
be
combined:
i


Ci S
i =S i S i

19

The alternatives are ranked in descending order of the Ci index.

3.2.2. Hierarchical fuzzy TOPSIS
The classical TOPSIS method does not consider a hierarchical structure between main attributes and subattributes as it is in the additive weighting and weighted product methods. Those methods evaluate the alternatives with respect to only main attributes with a single level. The common property of these methods is their
easiness of implementation. Meanwhile the well known and widely used multi-attribute decision-making
method, AHP, considers a hierarchical model which gives the ability of taking into consideration more information and provides superiority to AHP among many other multi-attribute decision-making methods. On the
other hand, this method consumes a lot of time at the implementation phase because of many questions are
asked for comparisons among alternatives and attributes, and its calculations are very tedious. The hierarchical TOPSIS is developed to benet both from the superiority of the hierarchical structure of AHP and easiness
of implementation of TOPSIS. Hierarchical TOPSIS is easy to implement, and it has less number of questions
to consider, and also provides a well expression of the decision problem to the decision-maker with its hierarchical model. Also its calculations are less tedious and faster than AHP.
Since this study suggests an integrated approach based on a hierarchical fuzzy TOPSIS method, its algorithm should be developed. While developing it, the hierarchy in Fig. 4 will be considered.

GOAL

MA1

SA11

SA12

...

MA2

SA1r1

SA21

SA22

MAP

...

SA2r2

...

SApl

MAn

...

SAn1

Fig. 4. The hierarchy considered in fuzzy TOPSIS algorithm.

SAn2

...

SAnr n

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C. Kahraman et al. / Information Sciences 177 (2007) 15671582

Assume that we have n main attributes, m sub-attributes, k alternatives, and s respondents.

Each main attriPn
bute has ri sub-attributes where the total number of sub-attributes m is equal to i1 ri .
The rst matrix eI MA , given by Eq. (20), is constructed from the weights of the main attributes with respect
to the goal.

eI MA

MA1
MA2 2Goal3
~1
w
..
6
.
~2 7
6w
7

6 7
MAp 4 w
~p 5
..
~n
w
.

20

MAn
~ p is the arithmetic mean of the weights assigned by the respondents and is calculated by Eq. (21):
where w
Ps
~
qpi
~ p i1 ; p 1; 2; . . . ; n
21
w
s
where ~
qpi denotes the fuzzy evaluation score of pth main attribute with respect to goal assessed by the ith
respondent. The second matrix eI SA represents the weights of the sub-attributes with respect to the main attributes. The weights vector obtained from eI MA are written above this eI SA as illustrated in Eq. (22).
~1
w
SA11
SA12
..
.
SA1r1
SA21
SA22
..
.
eI SA SA2r2
..
.
SApl
..
.
SAn1
SAn2
..
.
SAnrn

~2
w



~p
w

2MA1 MA2    MAp

~ 11 0
 0
w
6
6w
 0
6 ~ 12 0
6
..
.
.
6.
..
6.
.
6
6
6w
~
 0
6 1r1 0
6
60
~ 21    0
w
6
6
~ 22    0
w
60
6
6.
..
..
6 ..
.
.
6
6
60
~ 2r2    0
w
6
6
6.
6 ..
0
6
6
60
~ pl
0
 w
6
6
6.
..
6 ..
.
6
6
60
0
 0
6
6
60
0
 0
6
6
6 ..
..
..
6.
.
.
4
0

 0



~n
w

   MA3
n
 0
7
 0 7
7
7
..
7
7
.
7
7
 0 7
7
7
 0 7
7
7
 0 7
7
7
..
7
.
7
7
 0 7
7
7
7
..
7
.
7
7
 0 7
7
7
7
0 7
7
7
~ n1 7
 w
7
7
~ n2 7
 w
7
7
7
..
7
.
5
~ nrn
 w

22

~ pl is the arithmetic mean of the weights assigned by the respondents and it is calculated by Eq. (23).
where w
Ps
~
qpli
~ pl i1
23
w
s
where ~
qpli is the weight of lth sub-attribute with respect to pth main attribute assessed by the ith respondent.

C. Kahraman et al. / Information Sciences 177 (2007) 15671582

1575

The third matrix eI A is formed by the scores of the alternatives with respect to the sub-attributes. The
weights vector obtained from eI SA are written above this eI A as in Eq. (24).
~ 11
w

~ 12
w

~ 1r1
... w

SA
2 11 SA12 . . . SA1r1
~c111 ~c112 . . . ~c11r1
6
A2 6 ~c211 ~c212 . . . ~c21r1
6
.. 6
..
..
..
. 6
.
.
.
6
eI A
6
Aq 6 ~cq11 ~cq12 . . . ~cq1r1
6
.. 6
..
..
. 6
.
.
4
Ak ~ck11 ~ck12 . . . ~ck1r1
A1

...

~ pl
w

. . . SApl
. . . ~c1pl
. . . ~c2pl
..
.
. . . ~cqpl
..
.
. . . ~ckpl

...

~ nrn
w

. . . SAnr3n
. . . ~c1nrn
7
. . . ~c2nrn 7
7
7
..
7
.
7
7
. . . ~cqnrn 7
7
7
..
7
.
5
. . . ~cknrn

24

where
e pl
W

n
X

25

~ pw
~ pj
w

j1

Since wpj = 0 for j 5 l, we can use Eq. (26) instead of Eq. (25)
e pl w
~ pw
~ pl
W

26

In eI A ; ~cqpl is the arithmetic mean of the scores assigned by the respondents and it is calculated by Eq. (27)
Ps
~
qqpli
~cqpl i1
27
s
where ~
qqpli is the fuzzy evaluation score of qth alternative with respect to lth sub-attribute under pth main attribute assessed by ith respondent.
After obtaining ~cqpl s, the hierarchical structure is ready to be included to the fuzzy TOPSIS algorithm
described in Section 3.2.1.
Table 2 will be used to determine the importance degree of each main attribute with respect to the goal and
each sub-attribute with respect to the main attributes. The linguistic terms represented by triangular fuzzy
numbers for scoring the alternatives are given in Table 3. Among the types of fuzzy numbers, the choice of
triangular fuzzy numbers is made for the sake of simplicity and understandability. The other types may
increase the computational complexity without substantially aecting the signicance of the results.

Table 2
The importance degrees
Very low
Low
Medium
High
Very high

(0, 0, 0.2)
(0, 0.2, 0.4)
(0.3, 0.5, 0.7)
(0.6, 0.8, 1)
(0.8, 1, 1)

Table 3
The scores
Very poor
Poor
Fair
Good
Very good

(0, 0, 20)
(0, 20, 40)
(30, 50, 70)
(60, 80, 100)
(80, 100, 100)

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C. Kahraman et al. / Information Sciences 177 (2007) 15671582

4. Application of the proposed framework

4.1. Evaluation environment and attributes
The proposed framework was applied to the one of the largest automotive manufacturers in Turkey. A
group of nine decision-makers, four from marketing department, three from design and engineering department, one from nancial department and a top-level manager came together to evaluate 14 NPIs. These ideas
are submitted from dierent employees and customers between July 2004 and December 2004.
A simple feasible starting point for evaluating any investment is to consider the investments revenues and
risks [31]. However, NPD investments have also a special characteristic, which may establish intangible prots
for the company depending on the creativity and innovative features of investments [1]. For this reason, we
have chosen three main attributes for the rst phase of the study: NPI related risks, benets and strategic
impact. In the second phase, the objective is to evaluate potential benets and risks associated with NPIs
in a detailed way. The hierarchical structure of decision attributes in NPI selection is shown in Fig. 5. These
factors are identied from the review of the related literature and from the interviews with some domain
experts.
4.2. Heuristic MAUF approach
The aspects considered in NPI evaluation are risk, benet, and strategic impact. Each of these aspects is
treated as a fuzzy set, bounded to a predetermined interval, and characterized by a single possibility distribution. Fig. 6 gives the membership functions for the aspects risk and strategic impact. Fig. 7 illustrates the membership function for the aspect benet. The conversion scale consists of the linguistic variables very low (VL),
very low to low (VLL), low (L), medium low (ML), medium (M), medium high (MH), high (H), high to very high
(HVH), and very high (VH). A scale of 0100 is used for risk and strategic impact while a monetary scale of
$0$500,000 is used for benets.
Through a careful discussion, we obtained the decision rules. As an example, one of the decision rules for
the utility function of Very Good as follows:
If the benet of alternative X is very high and its strategic impact is very high and its risk is very low
then the utility value of the alternative X is very good.

NEW PRODUCT IDEA EVALUATION

Benefits

Strategic
Impact

Profitability

Strategic value

Efficiency

Business impact

Risks

Systematic
risks

Unsystematic
risks

Financial

Managerial

Technical

Personnel

Fig. 5. Hierarchical structure of decision criteria in NPI evaluation.

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1577

(x)
VL

VLL

ML

MH

HVH

60

70

80

VH

1.0

10

20

30

40

50

90

100

Fig. 6. The membership function for the evaluation aspect risk and strategic impact.

(x )
VL VLL

ML

150

200

250

MH

HVH

300

350

400

VH

1.0

50

100

450 500

x ( $1,000)

Fig. 7. Membership function for the evaluation aspect benet.

After identifying all decision rules, we listed all alternatives and evaluated them according to the determined
rules. Then we obtained the utility values of each alternative as given in Table 4. Five alternatives (NPIs 1, 4, 9,
11 and 14), which have the highest utility values, were identied for a detailed analysis.
Table 4
The linguistic evaluation of the alternatives with respect to each criterion
Alternatives

Benets

Strategic impact

Risks

Utility

NPI-1
NPI-2
NPI-3
NPI-4
NPI-5
NPI-6
NPI-7
NPI-8
NPI-9
NPI-10
NPI-11
NPI-12
NPI-13
NPI-14

High to very high

Low
High to very high
Very high
High
Medium
Mediumhigh
High
Very high
High to very high
Very high
Mediumhigh
Medium
Very high

Very high
Very low to low
Mediumgood
High
High
Mediumhigh
Medium
Very high
High
High
Very high
Medium
Low
High to very high

Low
Medium
Very low to low
Low
Mediumlow
Low
Mediumlow
High
Very low to low
Low
Mediumlow
Medium
Mediumhigh
Low

Very good
Mediumpoor
Good
Very good
Good
Mediumgood
Medium
Good
Very good
Good
Very good
Mediumgood
Mediumpoor
Very good

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4.3. Hierarchical fuzzy TOPSIS method

In the second step, the identied ve NPIs by heuristic MAUF approach were evaluated using the hierarchical fuzzy TOPSIS. Taking into consideration the hierarchy given in Fig. 5, a detailed questionnaire for
fuzzy TOPSIS was prepared to receive the individual weights of main, sub and sub-sub-attributes. Prepared
questionnaires were applied to the group of decision-makers.
Since we preferred using triangular fuzzy numbers (TFNs), the equations based on trapezoidal fuzzy numbers in the fuzzy TOPSIS algorithm given in Section 3.1 are rewritten for TFNs. Since a triangular fuzzy number (a, b, c) can be represented in a trapezoidal form like (a, b, b, c), it can be easily seen that Eq. (5) can be
expressed as follows:
8


>
< xij xj adij ; bbij ; daij
j
j
j
rij
28
   
ai bi d i
>
: x
j xij d ij ; bij ; aij
Then, Eq. (12) is reduced to Eq. (29)
Mvij

a2ij d 2ij  aij bij bij d ij

3aij d ij 

29

Dij and D
ij are calculated by Eqs. (30) and (31), respectively.
8
cij  a

>
>
< 1  b c  a  b for bij < b
ij
ij
8i; j
Dij
c  aij
>

>
:1 
for
b
<
b
ij
bij c  aij  b
8

c  aij

>
>
< 1  b c  a  b for b < bij
ij
ij

Dij
8i; j
cij  a
>

>
for
b
<
b
:1  
ij
b cij  a  bij

30

31

 

where vj a ; b ; c and v
j a ; b ; c are the fuzzy numbers with the largest generalized mean and the
smallest generalized mean, respectively.
Then, the steps of the hierarchical fuzzy TOPSIS algorithm are executed. The model considered in the study
has three main attributes, six sub-attributes, four sub-sub-attributes and ve alternatives. The evaluations
from all nine respondents were received and eI MA , eI SA and eI A were obtained as in Tables 58.

Table 5
eI MA
Goal
Benets
Strategic impact
Risks

(0.42, 0.62, 0.80)

(0.43, 0.63, 0.83)
(0.58, 0.78, 0.93)

Table 6
eI SA
Protability
Eciency
Strategic value
Business impact
Systematic risks
Unsystematic risks

Benets

Strategic impact

Risks

(0.53, 0.73, 0.87)

(0.32, 0.61, 0.83)
(0.00, 0.00, 0.00)
(0.00, 0.00, 0.00)
(0.00, 0.00, 0.00)
(0.00, 0.00, 0.00)

(0.00, 0.00, 0.00)

(0.00, 0.00, 0.00)
(0.66, 0.86, 0.97)
(0.47, 0.67, 0.80)
(0.00, 0.00, 0.00)
(0.00, 0.00, 0.00)

(0.00, 0.00, 0.00)

(0.00, 0.00, 0.00)
(0.00, 0.00, 0.00)
(0.00, 0.00, 0.00)
(0.53, 0.73, 0.87)
(0.63, 0.83, 0.97)

C. Kahraman et al. / Information Sciences 177 (2007) 15671582

1579

Table 7
eI SSA
Financial
Technical
Managerial
Personnel

Systematic risks

Unsystematic risks

(0.39, 0.59, 0.77)

(0.49, 0.69, 0.87)
(0.00, 0.00, 0.00)
(0.00, 0.00, 0.00)

(0.00, 0.00, 0.00)

(0.00, 0.00, 0.00)
(0.49, 0.69, 0.87)
(0.36, 0.56, 0.73)

Table 8
eI A
Prociency

Eciency

Strategic impact

Business value

NPI-1
NPI-4
NPI-9
NPI-11
NPI-14

(44, 68, 82)

(43, 61, 79)
(36, 58, 63)
(46, 70, 82)
(55, 69, 78)

(55, 78, 92)

(63, 90, 97)
(60, 76, 94)
(62, 80, 94)
(58, 88, 95)

(62, 85, 96)

(45, 59, 75)
(50, 61, 78)
(55, 66, 83)
(61, 83, 94)

(59, 78, 88)

(56, 75, 86)
(48, 58, 73)
(49, 67, 75)
(50, 63, 73)

NPI-1
NPI-4
NPI-9
NPI-11
NPI-14

Financial risks
(51, 64, 78)
(47, 60, 73)
(32, 48, 66)
(42, 56, 69)
(55, 69, 75)

Technical risks
(48, 66, 81)
(47, 63, 73)
(24, 31, 47)
(33, 42, 56)
(49, 62, 73)

Managerial risks
(51, 64, 73)
(69, 87, 91)
(32, 48, 66)
(49, 67, 75)
(49, 62, 73)

Personnel risks
(43, 61, 79)
(52, 74, 88)
(32, 48, 66)
(39, 54, 72)
(42, 60, 78)

Table 9
Distances from the ideal solution

NPI-1
NPI-4
NPI-9
NPI-11
NPI-14

S i

S
i

Ci

Normalized Ci

0.278
0.298
1.213
0.691
0.414

0.952
0.913
0.024
0.546
0.886

0.774
0.754
0.020
0.441
0.681

0.290
0.282
0.007
0.165
0.255

Table 9 shows the distances from the ideal solution for each NPI and the normalized values making
the results easy to interpret. The results in Table 9 indicate that NPI-1 achieves the highest score whereas
NPI-9 has the lowest.
4.4. Results
From a set of 14 NPIs, rst a rough evaluation is made with heuristic MAUF approach using the rules
dened by decision-makers. The rst phase determined that NPIs 1, 4, 9, 11, and 14 were to be considered
in the second phase for a detailed evaluation by the fuzzy hierarchical TOPSIS approach. The reduced set
of alternatives selected with respect to the evaluations is analyzed by the hierarchy developed in the initialization phase. A ranking among the reduced set of alternatives is the result of the second phase. The obtained
results indicate that NPI-1, NPI-4, and NPI-14 are the rst NPIs to invest. Although NPI-9 is selected in the
rst phase, it is not eligible to invest it because of its relatively low score.
4.5. Sensitivity analysis
To analyze the attitudes of the alternatives under dierent weights of main attributes, a sensitivity analysis
is made. The results of the sensitivity analysis are given in Table 10 and the graphical representation of these
results is illustrated in Fig. 8. Four states in total are examined: One of the main attributes has the highest

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C. Kahraman et al. / Information Sciences 177 (2007) 15671582

Table 10
Sensitivity analysis
B

(0.80, 1.00, 1.00)

(0.00, 0.00, 0.20)
(0.00, 0.00, 0.20)
(0.30, 0.50, 0.70)

SI

(0.00, 0.00, 0.20)

(0.80, 1.00, 1.00)
(0.00, 0.00, 0.20)
(0.30, 0.50, 0.70)

Normalized Ci

(0.00, 0.00, 0.20)

(0.00, 0.00, 0.20)
(0.80, 1.00, 1.00)
(0.30, 0.50, 0.70)

States

NPI-1

NPI-4

NPI-9

NPI-11

NPI-14

1
2
3
4

0.233
0.412
0.236
0.278

0.109
0.156
0.334
0.262

0.091
0.021
0.045
0.049

0.266
0.154
0.139
0.169

0.300
0.257
0.246
0.243

Normalized Ci

0. 500
0. 400
0. 300
0. 200
0. 100
0. 000

4
3

NPI-1
NPI-4

NPI-9

NPI-11

es

at

St

NPI-14

Fig. 8. Sensitivity analysis.

possible weight whereas the other two have the minimum (this creates three states). The fourth state is considered for the equal mid-value weights. For each state, normalized relative closeness to ideals (Ci) are
computed.
It is clear that not only the importance of sub and sub-sub-attributes but also the importance of main attributes are very inuential to the selection process. The sensitivity application shows us prioritization of NPI-1,
4, and 14 are eected by decision-makers perceptions about main attributes. In State 1 where the benet
aspect has the largest weight, NPI-11 performs close to NPI-14.
5. Conclusion
In todays fast and dynamic markets for innovative products, the success of a product highly depends on
the eciency and eectiveness of the NPD process. A particularly important key to the adequacy of a NPD
process is the way in which it is capable of handling uncertainty. On the other hand, developing new products
is a risky process involving uncertainty. In order to reduce these risks and uncertainties, companies need to
evaluate their new product initiatives carefully and make accurate decisions.
In this paper, an integrated approach based on fuzzy heuristic MAUF and hierarchical fuzzy TOPSIS
method is proposed to improve the quality and eectiveness of decision-making in new product introduction.
The approach is based on the premise that the selection among NPIs should be viewed as a product of benets,
strategic impact, and risks. The rst phase of the evaluation consists of judgments of decision-makers with
respect to these three main attributes, whereas the second phase considers a detailed hierarchy of attributes
and alternatives.
It is clear that the selection among NPIs is a dicult and sensitive issue which has quantitative and qualitative aspects, complexity, and imprecision. The developed two phase multi-attribute decision-making

C. Kahraman et al. / Information Sciences 177 (2007) 15671582

1581

approach seems to be usable for the solution of this problem. For further research, the other single level multiattribute methods like outranking methods and multi-attribute utility theory can be developed to compare
with the results of fuzzy hierarchical TOPSIS.
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