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==Uses and applications==
==Uses and applications==
While it can be used by individuals working on straightforward decisions, proponents believe AHP is most useful where teams of people are working on complex problems, especially those with high stakes, involving human perceptions and judgments, whose resolutions have long-term repercussions.<ref name='Bhushan, 2004'>{{cite book | last = Bhushan | first = Navneet | authorlink = | coauthors = Kanwal Rai | title = Strategic Decision Making: Applying the Analytic Hierarchy Process | publisher = Springer-Verlag | date = January, 2004| location = London | pages = | url = http://www.amazon.com/exec/obidos/tg/detail/-/1852337567/ref=pd_sl_aw_flat-hi_txtbooks07high_27378365_1 | doi = | id = | isbn = 1-8523375-6-7 }}</ref>
While it can be used by individuals working on straightforward decisions, AHP is most useful where teams of people are working on complex problems, especially those with high stakes, involving human perceptions and judgments, whose resolutions have long-term repercussions.<ref name='Bhushan, 2004'>{{cite book | last = Bhushan | first = Navneet | authorlink = | coauthors = Kanwal Rai | title = Strategic Decision Making: Applying the Analytic Hierarchy Process | publisher = Springer-Verlag | date = January, 2004| location = London | pages = | url = http://www.amazon.com/exec/obidos/tg/detail/-/1852337567/ref=pd_sl_aw_flat-hi_txtbooks07high_27378365_1 | doi = | id = | isbn = 1-8523375-6-7 }}</ref>
It has unique advantages where important elements of the decision are difficult to quantify or compare, or where communication among team members is impeded by their different specializations, terminologies, or perspectives. Computer software is available to assist in the application of the process.
It has unique advantages where important elements of the decision are difficult to quantify or compare, or where communication among team members is impeded by their different specializations, terminologies, or perspectives. Computer software is available to assist in the application of the process.


Revision as of 07:58, 6 November 2007

The Analytic Hierarchy Process (AHP) is a structured technique for dealing with complex decisions. Based on mathematics and human psychology, it was developed by Thomas L. Saaty in the 1970s and has been extensively studied and refined since then. It is used throughout the world in a wide variety of decision situations, in fields such as government, business, industry, healthcare, quality, and education.

The AHP provides a method for decomposing a complex decision problem into a hierarchy of more easily comprehended sub-problems, each of which can be worked with and evaluated on its own. When evaluating this hierarchy, the AHP considers measurements and other objective data about its various elements, but its essential nature is to work with the decision makers’ judgments about the meaning and importance of that information. It also works with their judgments about intangible aspects of the decision.

The AHP converts the decision makers' judgments to numerical values that can be processed, evaluated and compared over the entire range of the problem. In the end, a numerical weight or priority is derived for each element of the hierarchy, allowing those elements to be compared to one another in a direct and consistent way. This capability distinguishes the AHP from other decision making techniques. It not only allows the decision to be considered more rationally and objectively, but it encourages communication that leads to a better global understanding of the problem and its possible solutions.

Uses and applications

While it can be used by individuals working on straightforward decisions, AHP is most useful where teams of people are working on complex problems, especially those with high stakes, involving human perceptions and judgments, whose resolutions have long-term repercussions.[1] It has unique advantages where important elements of the decision are difficult to quantify or compare, or where communication among team members is impeded by their different specializations, terminologies, or perspectives. Computer software is available to assist in the application of the process.

The applications of AHP to complex decision situations have numbered in the thousands,[2] and have produced extensive results in problems involving alternative selection, planning, resource allocation, and priority setting.[1] Many such applications are never reported to the outside world, because they take place at high levels of large organizations where security and privacy considerations prohibit their disclosure. But some uses of AHP are discussed in the literature. Recently these have included:

AHP was recently applied to a project that uses video footage to assess the condition of highways in Virginia. Highway engineers first used it to determine the optimum scope of the project, then to justify its budget to lawmakers.[8]

The process is widely used in countries around the world. At a recent international conference on AHP, over 90 papers were presented from 19 countries, including the U.S., Germany, Japan, Chile, Malaysia, and Nepal. Topics covered ranged from Establishing Payment Standards for Surgical Specialists, to Strategic Technology Roadmapping, to Infrastructure Reconstruction in Devastated Countries.[9] AHP was introduced in China in 1982, and its use in that country has expanded greatly since then—its methods are highly compatible with the traditional Chinese decision making framework, and it has been used for many decisions in the fields of economics, energy, management, environment, traffic, agriculture, industry, and the military.[10]

Though using AHP requires no specialized academic training, the subject is widely taught at the university level—one AHP software provider lists over a hundred colleges and universities among its clients.[11] AHP is considered an important subject in many institutions of higher learning, including schools of engineering[12] and graduate schools of business.[13] AHP is also an important subject in the quality field, and is taught in many specialized courses including Six Sigma, Lean Six Sigma, and QFD.[14][15][16]

In China, nearly a hundred schools offer courses in AHP, and many doctoral students choose AHP as the subject of their research and dissertations. Over 900 papers have been published on the subject in that country, and there is at least one Chinese scholarly journal devoted exclusively to AHP.[10]

Summary

The procedure can be summarized as:

  1. The alternatives and the significant attributes are identified.
  2. For each attribute, and each pair of alternatives, the decision makers specify their preference (for example, whether the location of alternative "A" is preferred to that of "B") in the form of a fraction between 1/9 and 9.
  3. Decision makers similarly indicate the relative significance of the attributes. For example, if the alternatives are comparing potential real-estate purchases, the investors might say they prefer location over price and price over timing.
  4. Each matrix of preferences is evaluated by using eigenvalues to check the consistency of the responses. This produces a "consistency coefficient" where a value of "1" means all preferences are internally consistent. This value would be lower, however, if a decision maker said X is preferred to Y, Y to Z but Z is preferred to X (such a position is internally inconsistent). It is this step that that causes many users to believe that AHP is theoretically well founded.[citation needed]
  5. A score is calculated for each alternative.


Criticisms

Despite its widespread use as a decision method, the AHP has been the subject of criticisms, notably about the possibility of different hierarchies being applied to identical problems; about possible major changes in results if the hierarchy is changed in minor ways; and about the absence of statistical theory to underlie the process. While the concerns are mostly theoretical or speculative, the process works well in practice and is extremely popular among decision-makers in the private and public sectors.[17]

AHP, like many systems based on pairwise comparisons, can produce "rank reversal" outcomes. That is a situation where the order of preference is, for example, A, B, C then D. But if C is eliminated for other reasons, the order of A and B could be reversed so that the resulting priority is then B, A, then D. It has been proven that any pairwise comparison system will still have rank-reversal solutions even when the pair preferences are consistent. [18][19]

Many alternatives to AHP are economically viable, especially for larger, riskier decision. Methods from decision theory and various economic modeling methods can be applied.

See also

Thomas L. Saaty, developer of the Analytic Hierarchy Process.

References

  1. ^ a b Bhushan, Navneet (January, 2004). Strategic Decision Making: Applying the Analytic Hierarchy Process. London: Springer-Verlag. ISBN 1-8523375-6-7. {{cite book}}: Check date values in: |date= (help); Unknown parameter |coauthors= ignored (|author= suggested) (help)
  2. ^ a b de Steiguer, J.E. (October, 2003), "The Analytic Hierarchy Process as a Means for Integrated Watershed Management" (PDF), in Renard, Kenneth G. (ed.), First Interagency Conference on Research on the Watersheds, Benson, Arizona: U.S. Department of Agriculture, Agricultural Research Service, pp. 736–740, retrieved 2007-08-20 {{citation}}: Check date values in: |date= (help); Unknown parameter |coauthors= ignored (|author= suggested) (help); Unknown parameter |coeditors= ignored (help)
  3. ^ Berrittella, M. (January, 2007), "An Analytic Hierarchy Process for the Evaluation of Transport Policies to Reduce Climate Change Impacts" (PDF), Fondazione Eni Enrico Mattei (Milano), retrieved 2007-08-20 {{citation}}: Check date values in: |date= (help); Cite has empty unknown parameter: |coeditors= (help); Unknown parameter |coauthors= ignored (|author= suggested) (help)
  4. ^ McCaffrey, James (June, 2005). "Test Run: The Analytic Hierarchy Process". MSDN Magazine. Retrieved 2007-08-21. {{cite journal}}: Check date values in: |date= (help); Cite has empty unknown parameter: |coauthors= (help)
  5. ^ Grandzol, John R. (August, 2005). "Improving the Faculty Selection Process in Higher Education: A Case for the Analytic Hierarchy Process" (PDF). IR Applications. 6. Retrieved 2007-08-21. {{cite journal}}: Check date values in: |date= (help); Cite has empty unknown parameter: |coauthors= (help)
  6. ^ Atthirawong, Walailak (September, 2002), "An Application of the Analytical Hierarchy Process to International Location Decision-Making" (PDF), in Gregory, Mike (ed.), Proceedings of The 7th Annual Cambridge International Manufacturing Symposium: Restructuring Global Manufacturing, Cambridge, England: University of Cambridge, pp. 1–18, retrieved 2007-08-20 {{citation}}: Check date values in: |date= (help); Unknown parameter |coauthors= ignored (|author= suggested) (help); Unknown parameter |coeditors= ignored (help)CS1 maint: date and year (link)
  7. ^ Dey, Prasanta Kumar (November, 2003). "Analytic Hierarchy Process Analyzes Risk of Operating Cross-Country Petroleum Pipelines in India". Natural Hazards Review. 4 (4): 213–221. Retrieved 2007-08-20. {{cite journal}}: Check date values in: |date= (help); Cite has empty unknown parameter: |coauthors= (help)
  8. ^ Larson, Charles D. (January, 2007), "Application of the Analytic Hierarchy Process to Select Project Scope for Videologging and Pavement Condition Data Collection", 86th Annual Meeting Compendium of Papers CD-ROM, Transportation Research Board of the National Academies, retrieved 2007-08-20 {{citation}}: Check date values in: |date= (help); Cite has empty unknown parameter: |coeditors= (help); Unknown parameter |coauthors= ignored (|author= suggested) (help)
  9. ^ "Participant Names and Papers, ISAHP 2005, Honolulu, Hawaii". July, 2005. Retrieved 2007-08-22. {{cite web}}: Check date values in: |date= (help)
  10. ^ a b Sun, Hongkai (July, 2005), "AHP in China" (PDF), in Levy, Jason (ed.), Proceedings of the 8th International Symposium on the Analytic Hierarchy Process, Honolulu, Hawaii, retrieved 2007-08-20 {{citation}}: Check date values in: |date= (help); Cite has empty unknown parameters: |coeditors= and |coauthors= (help)CS1 maint: date and year (link)
  11. ^ "List of Expert Choice education clients". Retrieved 2007-08-23.
  12. ^ Drake, P.R. (1998). "Using the Analytic Hierarchy Process in Engineering Education" (PDF). International Journal of Engineering Education. 14 (3): 191–196. Retrieved 2007-08-20. {{cite journal}}: Cite has empty unknown parameter: |coauthors= (help)
  13. ^ Bodin, Lawrence (January, 2004). "Exercises for Teaching the Analytic Hierarchy Process". INFORMS Transactions on Education. 4 (2). Retrieved 2007-08-20. {{cite journal}}: Check date values in: |date= (help); Unknown parameter |coauthors= ignored (|author= suggested) (help)
  14. ^ Hallowell, David L. (January, 2005). "Analytical Hierarchy Process (AHP) -- Getting Oriented". iSixSigma.com. Retrieved 2007-08-21. {{cite journal}}: Check date values in: |date= (help); Cite has empty unknown parameter: |coauthors= (help)
  15. ^ "Analytic Hierarchy Process (AHP)". QFD Institute. Retrieved 2007-08-21. {{cite journal}}: Cite has empty unknown parameter: |coauthors= (help)
  16. ^ "Analytical Hierarchy Process: Overview". TheQualityPortal.com. Retrieved 2007-08-21. {{cite journal}}: Cite has empty unknown parameter: |coauthors= (help)
  17. ^ de Steiguer, J.E. (October, 2003), "The Analytic Hierarchy Process as a Means for Integrated Watershed Management" (PDF), in Renard, Kenneth G. (ed.), First Interagency Conference on Research on the Watersheds, Benson, Arizona: U.S. Department of Agriculture, Agricultural Research Service, pp. 736–740 {{citation}}: Check date values in: |date= (help); Unknown parameter |coauthors= ignored (|author= suggested) (help); Unknown parameter |coeditors= ignored (help)
  18. ^ Dyer, J. S. (1990): Remarks on the Analytic Hierarchy Process. In: Management Science, 36 (3), S. 249-258.
  19. ^ Simon French "Decision Theory: An Introduction to the Mathematics of Rationality", Ellis Horwood, Chichester, 1988.
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