M Gilang Prakasa/29115651
Chapter 16
THE ANALYTIC HIERARCHY PROCESS
The analytic hierarchy process (AHP) is a structured technique for organizing
and analyzing complex decisions, based on mathematics and psychology. It was
developed by Thomas L. Saaty in the 1970s and has been extensively studied and
refined since then.
The first step in the analytic hierarchy process is to model the problem as a hierarchy.
In doing this, participants explore the aspects of the problem at levels from general to
detailed, then express it in the multileveled way that the AHP requires. As they work
to build the hierarchy, they increase their understanding of the problem, of its context,
and of each other's thoughts and feelings about both
Stage 1: Make the decision hierarchy.
Stage 2: Make pairwise comparisons of attributes and alternatives. to
determine the relative importance of attributes and also to compare how well the
options perform on the different attributes. For example, how much more
important is the initial purchase price than the cost of upgrading the machine at
a later date?
Stage 3: Transform the comparisons into weights and check the
consistency of the decision makers comparisons.
Stage 4: Use the weights to obtain scores for the different options and
make a provisional decision.
Stage 5: Perform sensitivity analysis. This will enable the decision maker to
examine how robust the provisional decision is to changes in the ratings of
importance and preference.
The relative strengths of the AHP
1. Formal structuring of problem. AHP has a formal structure to problems.
Complex problem can be decomposed into simpler judgement.
2. Simplicity of pairwise comparisons. The decision maker can focus on each
small part of the problem because only two options of alternatives have to be
considere. Sometimes verbal comparisons are also likely to be preferred by
decision makers who have difficulty in expressing their judgments numerically.
3. Redundancy allows consistency to be checked. In AHP method, the
decision maker need to made more comparison to establish a set of weight. For
example, if a decision maker indicates that alternatives A is twice as important
as B, and B, in turn, is four times as important as C, then it can be inferred that
A is eight times more important than C. Then, by also asking the decision maker
to compare A with C it is possible to check the consistency of the judgments.
Downside of the AHP
The AHP is included in most operations research and management science
textbooks, and is taught in numerous universities; it is used extensively in
organizations that have carefully investigated its theoretical underpinnings. [5] While
the general consensus is that it is both technically valid and practically useful, the
method does have its critics] Most of the criticisms involve a phenomenon called rank
reversal, discussed in the following section.
1. Rank reversal ,Decision making involves ranking alternatives in terms of
criteria or attributes of those alternatives. It is an axiom of some decision
theories that when new alternatives are added to a decision problem, the
ranking of the old alternatives must not change that "rank reversal" must not
occur.
2. Conversion from verbal to numeric scale. Decision makers who use the
verbal method of comparison will have their judgments automatically
converted to the numeric scale, but the correspondence between the two
scales is based on untested assumptions. If you indicate that A is weakly more
important than B the AHP will assume that you consider A to be three times
more important, but this may not be the case.
3. Problems of 1 to 9 scale. The AHP method assume that when one
alternatives is extremely more important than another then ratios of 1 to 3 or
1 to 5 are more appropriate than the 1 to 9 ratio. However, if the decision
maker does wish to incorporate very extreme ratios into the decision model the
restriction of pairwise comparisons to a 1 to 9 scale is bound to create
inconsistencies. For example, if A is considered to be four times more
important than B, and B is four times more important than C, then to be
consistent A should be judged to be 16 times more important than C, but this
is not possible.
4. Meaningfulness of responses to questions. In AHP method, weights are
elicited in without reference to the scales on which attributes are measured.
5. New alternatives can reverse the rank of existing alternatives.
6. Number of comparisons required may be large. AHP method also require a
large number of judgments from the decision maker.
