Build AHP Diagram

Objectives:

• Develop the capability to build AHP diagram to solve diverse real-life problems from both engineering and business perspectives.
• Develop the capability to interpret the results from AHP from decision-maker perspectives.
• Understand the advantages and disadvantages of AHP
• Be capable of using AHP application software

Introduction to AHP

Analytic Hierarchy Process (AHP) is one of Multi-Criteria Decision-Making methods that was originally developed by Prof. Thomas L. Saaty. It is a structured method to derive ratio scales from paired comparisons. It defines the problem with at least three hierarchical structures Problem (Objective), Criteria and Alternatives (see Figure below). AHP allows some small inconsistency in judgment because humans are not always consistent.

The AHP can help you quantify the judgments you use in decision making through the computed weighted scores for each set of criteria that you consider, and then you use those weights to calculate a final score for each alternative. Whether you use this method to make a final choice, the results can be very clear.

Here’s a quick overview of the Analytic Hierarchy Process.

1. Develop “hierarchy”

• Define your objective.
• Identify the alternatives you’re considering.
• Outline the major factors you’ll use to evaluate each alternative.
• Identify criteria (and any sub-criteria of these) that you need to consider for each of these major factors. Link these to the major factors (see figure above for an example of this.)
• Continue to build a hierarchy of decision criteria until all factors are identified and linked.

2. Establish your priorities

• Using the paired comparison, determine your criteria preferences (perhaps A is a little more preferred than B, B is much more preferred than C, and so on).
• Rate these preferences from 1-9.
• Repeat this for each level in your hierarchy.

3. Synthesize, or combine, the ratings

• Calculate weighted criteria scores that combine all of the ranking data.

4. Compare the alternatives

• Using those combined scores, calculate a final score for each alternative.