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Multi Criteria Decision
Multi Criteria Decision
Making
Learning Objectives
9.1 Goal Programming
9.2 Graphical Interpretation of Goal Programming
9.3 Computer Solution of Goal Programming Problems
9.4 The Analytical Hierarchy Process
9.5 Scoring Models
Overview 1
• Study of problems with several criteria, i.e., multiple criteria,
instead of a single objective when making a decision.
• Three techniques discussed: goal programming, the
analytical hierarchy process and scoring models.
• Goal programming is a variation of linear programming
considering more than one objective (goals) in the objective
function.
• The analytical hierarchy process develops a score for each
decision alternative based on comparisons of each under
different criteria reflecting the decision makers’ preferences.
• Scoring models are based on a relatively simple weighted
scoring technique.
Learning Objective 9.1
• Goal Programming
Problem Data (1 of 2)
Beaver Creek Pottery Company Example:
Maximize Z $40 x1 50 x2
subject to:
Profit goal:
40 x1 50 x2 d 2 d 2 1,600 $ day
Material goal:
subject to:
x1 2 x2 d1 d1 40 labor
40 x1 50 x2 d 2 d 2 1,600 profit
4 x1 3 x2 d3 d3 120 clay
x1, x2 , d1 , d1 , d 2 , d 2 , d3 , d3 0
Alternative Forms of Goal Constraints (1 of 2)
• Changing fourth-priority goal “limit overtime to 10 hours”
instead of minimizing overtime:
– d1 d 4 d 4 10
– minimize P1d1 , P2d 2 , P3d 3 , P4d 4
subject to:
x1 2 x2 d1 d1 40
40 x1 50 x2 d 2 d 2 1,600
4 x1 3 x2 d 3 d 3 120
d1 d 4 d 4 10
x1 d 5 30
x2 d 6 20
x1, x2 , d1 , d1 , d 2 , d 2 , d3 , d 3 , d 4 , d 4 , d 5 , d 6 0
Learning Objective 9.2
subject to:
x1 2 x2 d1 d1 40
40 x1 50 x2 d 2 d 2 1,600
4 x1 3 x2 d3 d 3 120
x1, x2 , d1 , d1 , d 2 , d 2 , d3 , d3 0
Solution: x1 15 bowls
x2 20 mugs
d1 15 hours
Learning Objective 9.3
• Computer Solution of Goal Programming Problems with
QM for Windows and Excel
Computer Solution Using Excel (1 of 3)
Exhibit 9.4
Computer Solution Using Excel (2 of 3)
Exhibit 9.5
Computer Solution Using Excel (3 of 3)
Exhibit 9.6
Solution for Altered Problem Using Excel
(1 of 6)
subject to:
x1 2 x2 d1 d1 40
40 x1 50 x2 d 2 d 2 1,600 This model includes
goals for overtime and
4 x1 3 x2 d3 d3 120
maximum storage levels
d1 d 4 d 4 10 for bowls and mugs.
x1 d5 30
x2 d 6 20
x1, x2 , d1 , d1 , d 2 , d 2 , d3 , d3 , d 4 , d 4 , d5 , d 6 0
Solution for Altered Problem Using Excel
(2 of 6)
Exhibit 9.7
Solution for Altered Problem Using
Excel (3 of 6)
Exhibit 9.8
Solution for Altered Problem Using
Excel (4 of 6)
Exhibit 9.9
Solution for Altered Problem Using
Excel (5 of 6)
Exhibit 9.10
Solution for Altered Problem Using
Excel (6 of 6)
Exhibit 9.11
Learning Objective 9.4
B one1third 1 one1fifth
3 5
C one1half 5 1
2
Developing Preferences Within Criteria
(1 of 3)
Overall Ranking:
Site Score
Charlotte 0.5314
Atlanta 0.3091
Birmingham 0.1595
Blank 1.0000
Summary of Mathematical Steps (1 of 2)
1. Develop a pairwise comparison matrix for each decision
alternative for each criteria.
2. Synthesization
a. Sum each column value of the pairwise comparison
matrices.
b. Divide each value in each column by its column sum.
c. Average the values in each row of the normalized
matrices.
d. Combine the vectors of preferences for each
criterion.
Summary of Mathematical Steps (2 of 2)
3. Develop a pairwise comparison matrix for the criteria.
4. Compute the normalized matrix.
5. Develop the preference vector.
6. Compute an overall score for each decision alternative
7. Rank the decision alternatives.
Learning Objective 9.5
• Scoring Model
Overview 3
Each decision alternative is graded in terms of how well it
satisfies the criterion according to following formula:
Si g ij w j
where:
wj = a weight between 0 and 1.00 assigned to criterion j;
1.00 important, 0 unimportant;
sum of total weights equals one.
gij = a grade between 0 and 100 indicating how well
alternative i satisfies criteria j;
100 indicates high satisfaction, 0 low satisfaction.
Example Problem (1 of 2)
Mall selection with four alternatives and five criteria:
Grades for Grades for Grades for Grades for
Weight Alternative Alternative Alternative Alternative
Decision Criteria
(0 to 1.00) (0 to 100) (0 to 100) (0 to 100) (0 to 100)
(Mall 1) (Mall 2) (Mall 3) (Mall 4)
School proximity 0.30 40 60 90 60
Median income 0.25 75 80 65 90
Vehicle traffic 0.25 60 90 79 85
Mall quality and 0.10 90 100 80 90
size
Proximity of other 0.10 80 30 50 70
shopping
Example Problem (2 of 2)
S1 .30 40 .25 75 .25 60 .10 90 .10 80 62.75
S2 .30 60 .25 80 .25 90 .10 100 .10 30 73.50
S3 .30 90 .25 65 .25 79 .10 80 .10 50 76.00
S4 .30 60 .25 90 .25 85 .10 90 .10 70 77.75
subject to:
80 x1 40 x2 d1 d1 3,000 interviews
50 x1 70 x2 d 2 d 2 $2,500 budget
80 x1 d 3 d 3 1,000 telephone interviews
where:
x1 = number of telephone interviews
Bike Gear Action (X) Gear Action (Y) Gear Action (Z) Row Averages
X 0.0909 0.0625 0.1026 0.0853
Row
Criteria Price Gears Weight
Averages
Price 0.6522 0.6667 0.6250 0.6479
Gears 0.2174 0.2222 0.2500 0.2299
Weight 0.1304 0.1111 0.1250 0.1222
Blank Blank Blank Blank 1.0000
Price 0.6479
Gears 0.2299
Weight 0.1222
Analytical Hierarchy Process Example
Problem: Problem Solution (4 of 4)
Step 3: Develop an overall ranking.