Project For

Management Science

SUBMITTED TO: -
Dr. Harpreet Kaur
BY:-
Shivani Kashyap
18DM201
INTRODUCTION
MARUTI SUZUKI india LTD is one of the largest car manufacturer in india. It is
currently market leader in automobile sector. It is very critical to develop
product which cater to the current needs of the customers based on the
current tastes & preferences. The manager has to decide which segment he
needs to cater by developing appropriate product i.e. SUV, hatchback, MUVs
or sedan etc
The manager will analyse the various constraints and which constraints is
most important in the process of product development, and also evaluates
the type of car on the basis of each criterion(constraints). Today’s dynamic
business dynamic environment requires businesses to react fast and take
decisions with long-term effects. Therefore, qualitative analysis should also
be taken into consideration.
PROBLEM STATEMENT

A situation in which a company plans to come up with a new car. The

company is in dilemma of which type of car will be the most favorable to
produce. The company has to choose between 5 alternatives on the basis of
5 criteria :

 Budget
 Competitive advantage
 Risk
 Profit margin
 Sales potential

The company has 5 alternatives to choose from:

 Sedan
 SUV
 Hatchback
 MUV
 Crossover

SELECT WHICH CAR TO

PRODUCE

BUDGET RISK SALES

POTENTIAL
COMP. PROFIT
ADVANTAGE MARGIN

SEDAN SUV HATCH MUV CROSS

BACK OVER
METHODOLOGY:-

Analytic Hierarchy Process (AHP). It is designed to solve complex

multicriteria decision problems. In AHP the decision maker has to give
his/her judgment about the relative importance of each criterion and he has
to specify his preference for each of the decision alternative using each
criterion. The output of AHP is a prioritized ranking of the decision
alternatives based on the overall preferences expressed by the decision
maker.

SOLUTION:

We start off with a pair-wise comparison from the fundamental building

blocks of AHP . We determine how important the criteria are relative to
each other when they are compared to each other in a pair.
The scale will show the responses for the pair wise criterion:
1= Both are equally considered .
3= One will moderately prefer the other .
5= Strong preference of one over the other
7= Very strong preference of one over the other
9= Extreme preferable than other one.

Now, we will take the following pair wise comparison among the criteria
RELATIVE IMPORTANCE OF BUDGET W.R.T OTHERS:

Competetive Profit Sales

Budget advantage Risk margin potential
Budget 1 4 1 3 1
Competetive
advantage 1/4 1 1/5 1/3 1/4
Risk 1 5 1 3 3
Profit margin 1/3 3 1/3 1 1/3
Sales potential 1 4 1/3 3 1
SUM TOTAL 3.58 17.00 2.86 10.33 5.58

Competetive Profit Sales Criteria

Budget advantage Risk margin potential weights
Budget 0.28 0.24 0.35 0.29 0.18 0.27
Competetive
advantage 0.07 0.06 0.07 0.03 0.04 0.06
Risk 0.28 0.29 0.35 0.29 0.54 0.35
Profit margin 0.09 0.18 0.12 0.10 0.06 0.11
Sales potential 0.28 0.24 0.12 0.29 0.18 0.22
SUM TOTAL 1
 λ 5.32
C.I. 0.08
C.R. 7.06%

Using the pairwise comparison matrix, we can now calculate the priority of
each criterion in terms of its contribution to the overall goal of selecting the
best mobile. This aspect of AHP is referred to as synthetization
The AHP synthesization procedure provides the priority of each criterion in
terms of its contribution to the overall goal of selecting a Mobile. So, AHP
determines that risk (C3) with a priority of 35% is the most important
criterion, followed by budget (C1), sales potential (C5) as calculated in
above table.
An important consideration in the process of AHP is the consistency of the
pairwise judgment provided by the decision maker. For this purpose we
calculate the consistency ratio (CR). Thus, if CR is 0.10 or less, the
consistency of the pairwise comparisons is considered reasonable, the
AHP process can continue further. Because for this case CR = 0.0706, we
can conclude that the degree of consistency in this case is acceptable.

ALTERNATIVE FOR BUDGET CRITERION

Sedan SUV Hatchback MUV Crossover

 Sedan 1 3 4 1/3 5
SUV 1/3 1 1/3 ¼ 3
Hatchback 1/4 3 1 ½ 2
MUV 3 4 2 1 4
Crossover 1/5 1/3 1/2 ¼ 1
SUM TOTAL 4.78 11.33 7.83 2.33 15.00

Priority
Sedan SUV Hatchback MUV Crossover vector
Sedan 0.21 0.26 0.51 0.14 0.33 0.29
SUV 0.07 0.09 0.04 0.11 0.20 0.10
Hatchback 0.05 0.26 0.13 0.21 0.13 0.16
MUV 0.63 0.35 0.26 0.43 0.27 0.39
Crossover 0.04 0.03 0.06 0.11 0.07 0.06
SUM TOTAL 1.00

λ 5.46
C.I. 0.11
C.R. 10.19%
The weighted averages for each alternative were:
sedan - 0.30
SUV - 0.14
hatchback - 0.06
MUV - 0.42
Cross over- 0.08
He also calculated the consistency ratio (CR) which is equal to 0.10, which
is less than 0.10. So, we can say that the degree of consistency in this
case is acceptable.
ALTERNATIVE FOR COMPETITIVE ADVANTAGE CRITERION
 Sedan SUV Hatchback MUV Crossover
Sedan 1 1/3 1/2 1/3 1/5
SUV 3 1 1/2 1/2 1/3
Hatchback 2 2 1 1/2 1/4
MUV 3 2 2 1 1/3
Crossover 5 3 4 3 1
Sum total 14.00 8.33 8.00 5.33 2.12

Priority
Sedan SUV Hatchback MUV Crossover vector
Sedan 0.07 0.04 0.06 0.06 0.09 0.07
SUV 0.21 0.12 0.06 0.09 0.16 0.13
Hatchback 0.14 0.24 0.13 0.09 0.12 0.14
MUV 0.21 0.24 0.25 0.19 0.16 0.21
Crossover 0.36 0.36 0.50 0.56 0.47 0.45
Sum total 1.00

λ 5.20
C.I. 0.049386
C.R. 4.41%

The weighted averages for each alternative were:

sedan - 0.07
SUV - 0.13
hatchback - 0.14
MUV - 0.21
Cross over- 0.45
He also calculated the consistency ratio (CR) which is equal to 0.049,
which is less than 0.10. So, we can say that the degree of consistency in
this case is acceptable.

ALTERNATIVE FOR COMPETITIVE ADVANTAGE CRITERION

Sedan SUV Hatchback MUV Crossover

Sedan 1 4 4 3 2
SUV 1/4 1 5 4 3
Hatchback 1/4 1/5 1 1/2 4
MUV 1/3 1/4 1/2 1 2
Crossover 1/2 1/3 1/4 1/2 1
Sum total 2.33 5.78 10.75 9.00 12.00

Priority
Sedan SUV Hatchback MUV Crossover vector
Sedan 0.43 0.69 0.37 0.33 0.17 0.40
SUV 0.11 0.17 0.47 0.44 0.25 0.29
Hatchback 0.11 0.03 0.09 0.06 0.33 0.12
MUV 0.14 0.04 0.05 0.11 0.17 0.10
Crossover 0.21 0.06 0.02 0.06 0.08 0.09
Sum total 1.00

λ 5.66
C.I. 0.17
C.R. 14.74%
The weighted averages for each alternative were:
sedan - 0.40
SUV - 0.29
hatchback - 0.12
MUV - 0.10
Cross over- 0.09
He also calculated the consistency ratio (CR) which is equal to 0.14, which
is less than 0.10. So, we can say that the degree of consistency in this
case is acceptable.

ALTERNATIVE FOR PROFIT MARGIN CRITERION

 Sedan SUV Hatchback MUV Crossover
Sedan 1 1/5 1/4 1/2 1/3
SUV 5 1 1/5 1/2 1/3
Hatchback 4 5 1 1/2 4
MUV 2 2 2 1 5
Crossover 3 3 1/4 1/5 1
Sum total 15.00 11.20 3.70 2.70 10.67

Priority
Sedan SUV Hatchback MUV Crossover vector
Sedan 0.07 0.02 0.07 0.19 0.03 0.07
SUV 0.33 0.09 0.05 0.19 0.03 0.14
Hatchback 0.27 0.45 0.27 0.19 0.38 0.31
MUV 0.13 0.18 0.54 0.37 0.47 0.34
Crossover 0.20 0.27 0.07 0.07 0.09 0.14
Sum total 1.00

λ 6.060973
C.I. 0.265243
C.R. 23.68%
The weighted averages for each alternative were:
sedan - 0.07
SUV - 0.14
hatchback - 0.31
MUV - 0.34
Cross over- 0.14
He also calculated the consistency ratio (CR) which is equal to 0.23, which
is less than 0.10. So, we can say that the degree of consistency in this
case is acceptable.
ALTERNATIVE FOR SALES POTENTIAL CRITERION

Sedan SUV Hatchback MUV Crossover

Sedan 1 2 1/3 1/4 3
SUV 1/2 1 1/2 1/4 4
Hatchback 3 2 1 3 1/2
MUV 4 4 1/3 1 4
Crossover 1/3 1/4 2 1/4 1
Sum total 8.83 9.25 4.17 4.75 12.50

Priority
Sedan SUV Hatchback MUV Crossover vector
Sedan 0.11 0.22 0.08 0.05 0.24 0.14
SUV 0.06 0.11 0.12 0.05 0.32 0.13
Hatchback 0.34 0.22 0.24 0.63 0.04 0.29
MUV 0.45 0.43 0.08 0.21 0.32 0.30
Crossover 0.04 0.03 0.48 0.05 0.08 0.14
Sum total 1

λ 6.84
C.I. 0.4602
C.R. 41.09%
The weighted averages for each alternative were:
sedan - 0.14
SUV - 0.13
hatchback - 0.29
MUV - 0.30
Cross over- 0.14
He also calculated the consistency ratio (CR) which is equal to 0.41, which
is less than 0.10. So, we can say that the degree of consistency in this
case is acceptable.

AHP RANKING USING OVERALL PRIORITIES

0.29 0.07 0.40 0.07 0.14

0.10 0.13 0.29 0.14 0.13
0.16 0.14 0.12 0.31 0.29
0.39 0.21 0.10 0.34 0.30
0.06 0.45 0.09 0.14 0.14

CRITERIA
WEIGHT
0.27
0.06
0.35
0.11
0.22

FINAL
PRIORITY
25.99%
17.89%
19.18%
25.27%
11.67%
REVIEW & DISCUSSION
Based on the priority vector, with given values
 Sedan - 25.99%
 SUV-17.89%
 HATCHBACK- 19.18%
 MUV- 25.27%
 CROSS OVER- 11.67%
Therefore, the manager will plan to develop SEDAN as the new product.