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Multi-Criteria Decision
Making
MCDM Approaches
Introduction
Zeleny (1982) opens his book “Multiple
Criteria Decision Making” with a statement:
“It has become more and more difficult to
see the world around us in a unidimensional
way and to use only a single criterion when
judging what we see”
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Introduction
Many public sector problems and even
private decision involve multiple objectives
and goals. As an example:
Locating a nuclear power plant involves
objectives such as:
• Safety
• Health
• Environment
• Cost
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Examples of Multi-Criteria
Problems
In a case study on the management of R&D
research (Moore et. al 1976), the following
objectives have been identified:
• Profitability
• Growth and diversity of the product line
• Increased market share
• Maintained technical capability
• Firm reputation and image
• Research that anticipates competition
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Examples of Multi-Criteria
Problems
In determining an electric route for power
transmission in a city, several objectives
could be considered:
• Cost
• Health
• Reliability
• Importance of areas
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Examples of Multi-Criteria
Problems
In selecting a major at KFUPM, several
objectives can be considered. These
objectives or criteria include:
• Job market upon graduation
• Job pay and opportunity to progress
• Interest in the major
• Likelihood of success in the major
• Future job image
• Parent wish
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Examples of Multi-Criteria
Problems
Wife selection problem. This problem is a
good example of multi-criteria decision
problem. Criteria include:
• Religion
• Beauty
• Wealth
• Family status
• Family relationship
• Education
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Approaches For MCDM
Several approaches for MCDM exist. We
will cover the following:
• Weighted score method ( Section 5.1 in text
book).
• TOPSIS method
• Analytic Hierarchy Process (AHP)
• Goal programming ?
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Weighted score method
Determine the criteria for the problem
Determine the weight for each criteria. The
weight can be obtained via survey, AHP,
etc.
Obtain the score of option i using each
criteria j for all i and j
Compute the sum of the weighted score for
each option .
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Weighted score method
In order for the sum to make sense all criteria
scale must be consistent, i.e.,
More is better or less is better for all criteria
Example:
In the wife selection problem, all criteria
(Religion, Beauty, Wealth, Family status, Family
relationship, Education) more is better
If we consider other criteria (age, dowry) less is
better
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Weighted score method
Let Sij score of option i using criterion j
wj weight for criterion j
Si score of option i is given as:
Si = wj Sij
j
The option with the best score is selected.
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Weighted Score Method
The method can be modified by using
U(Sij) and then calculating the weighted
utility score.
To use utility the condition of separability
must hold.
Explain the meaning of separability:
U(Si) = wj U(Sij)
U(Si) U( wj Sij)
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Example Using Weighted Scoring
Method
Objective
• Selecting a car
Criteria
• Style, Reliability, Fuel-economy
Alternatives
• Civic Coupe, Saturn Coupe, Ford Escort,
Mazda Miata
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Weights and Scores
Weight 0.3 0.4 0.3 Si
Style Reliability Fuel Eco.
Civic 7 9 9 8.4
Saturn 8 7 8 7.6
Ford 9 6 8 7.5
Mazda 6 7 8
7.0
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TOPSIS METHOD
Technique of Order Preference by
Similarity to Ideal Solution
This method considers three types of
attributes or criteria
• Qualitative benefit attributes/criteria
• Quantitative benefit attributes
• Cost attributes or criteria
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TOPSIS METHOD
In this method two artificial alternatives are
hypothesized:
Ideal alternative: the one which has the best level
for all attributes considered.
Negative ideal alternative: the one which has the
worst attribute values.
TOPSIS selects the alternative that is the closest to
the ideal solution and farthest from negative ideal
alternative.
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Input to TOPSIS
TOPSIS assumes that we have m alternatives
(options) and n attributes/criteria and we have the
score of each option with respect to each criterion.
Let xij score of option i with respect to criterion j
We have a matrix X = (xij) mn matrix.
Let J be the set of benefit attributes or criteria
(more is better)
Let J' be the set of negative attributes or criteria
(less is better)
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Steps of TOPSIS
Step 1: Construct normalized decision
matrix.
This step transforms various attribute
dimensions into non-dimensional attributes,
which allows comparisons across criteria.
Normalize scores or data as follows:
rij = xij/ (x2ij) for i = 1, …, m; j = 1, …, n
i
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Steps of TOPSIS
Step 2: Construct the weighted normalized
decision matrix.
Assume we have a set of weights for each
criteria wj for j = 1,…n.
Multiply each column of the normalized
decision matrix by its associated weight.
An element of the new matrix is:
vij = wj rij
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Steps of TOPSIS
Step 3: Determine the ideal and negative ideal
solutions.
Ideal solution.
A* = { v1* , …, vn*}, where
vj* ={ max (vij) if j J ; min (vij) if j J' }
i i
Negative ideal solution.
A' = { v1' , …, vn' }, where
v' = { min (vij) if j J ; max (vij) if j J' }
i i
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Steps of TOPSIS
Step 4: Calculate the separation measures for each
alternative.
The separation from the ideal alternative is:
Si * = [ (vj*– vij)2 ] ½ i = 1, …, m
j
Similarly, the separation from the negative ideal
alternative is:
S'i = [ (vj' – vij)2 ] ½ i = 1, …, m
j
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Steps of TOPSIS
Step 5: Calculate the relative closeness to
the ideal solution Ci*
Ci* = S'i / (Si* +S'i ) , 0 Ci* 1
Select the option with Ci* closest to 1.
WHY ?
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Applying TOPSIS Method to
Example
Weight 0.1 0.4 0.3 0.2
Style Reliability Fuel Eco. Cost
Civic 7 9 9 8
Saturn 8 7 8 7
Ford 9 6 8 9
Mazda 6 7 8 6
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Applying TOPSIS to Example
m = 4 alternatives (car models)
n = 4 attributes/criteria
xij = score of option i with respect to criterion j
X = {xij} 44 score matrix.
J = set of benefit attributes: style, reliability, fuel
economy (more is better)
J' = set of negative attributes: cost (less is better)
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Steps of TOPSIS
Step 1(a): calculate (x2ij )1/2 for each column
Style Rel. Fuel Cost
Civic 49 81 81 64
Saturn 64 49 64 49
Ford 81 36 64 81
Mazda 36 49 64 36
xij2i 230 215 273 230
(x2)1/2 15.17 14.66 16.52 15.17 25
Steps of TOPSIS
Step 1 (b): divide each column by (x2ij )1/2
to get rij
Style Rel. Fuel Cost
Civic 0.46 0.61 0.54 0.53
Saturn 0.53 0.48 0.48 0.46
Ford 0.59 0.41 0.48 0.59
Mazda 0.40 0.48 0.48 0.40
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Steps of TOPSIS
Step 2 (b): multiply each column by wj to
get vij.
Style Rel. Fuel Cost
Civic 0.046 0.244 0.162 0.106
Saturn 0.053 0.192 0.144 0.092
Ford 0.059 0.164 0.144 0.118
Mazda 0.040 0.192 0.144 0.080
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Steps of TOPSIS
Step 3 (a): determine ideal solution A*.
A* = {0.059, 0.244, 0.162, 0.080}
Style Rel. Fuel Cost
Civic 0.046 0.244 0.162 0.106
Saturn 0.053 0.192 0.144 0.092
Ford 0.059 0.164 0.144 0.118
Mazda 0.040 0.192 0.144 0.080
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Steps of TOPSIS
Step 3 (a): find negative ideal solution A'.
A' = {0.040, 0.164, 0.144, 0.118}
Style Rel. Fuel Cost
Civic 0.046 0.244 0.162 0.106
Saturn 0.053 0.192 0.144 0.092
Ford 0.059 0.164 0.144 0.118
Mazda 0.040 0.192 0.144 0.080
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Steps of TOPSIS
Step 4 (a): determine separation from ideal
solution A* = {0.059, 0.244, 0.162, 0.080}
Si* = [ (vj*– vij)2 ] ½ for each row
j
Style Rel. Fuel Cost
Civic (.046-.059)2 (.244-.244)2 (0)2 (.026)2
Saturn (.053-.059)2 (.192-.244)2 (-.018)2 (.012)2
Ford (.053-.059)2 (.164-.244)2 (-.018)2 (.038)2
Mazda (.053-.059)2 (.192-.244)2 (-.018)2 (.0)2
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Steps of TOPSIS
Step 4 (a): determine separation from ideal
solution Si*
(vj*–vij)2 Si* = [ (vj*– vij)2 ] ½
Civic 0.000845 0.029
Saturn 0.003208 0.057
Ford 0.008186 0.090
Mazda 0.003389 0.058
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Steps of TOPSIS
Step 4 (b): find separation from negative ideal
solution A' = {0.040, 0.164, 0.144, 0.118}
Si' = [ (vj'– vij)2 ] ½ for each row
j
Style Rel. Fuel Cost
Civic (.046-.040)2 (.244-.164)2 (.018)2 (-.012)2
Saturn (.053-.040)2 (.192-.164)2 (0)2 (-.026)2
Ford (.053-.040)2 (.164-.164)2 (0)2 (0)2
Mazda (.053-.040)2 (.192-.164)2 (0)2 (-.038)2
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Steps of TOPSIS
Step 4 (b): determine separation from
negative ideal solution Si'
(vj'–vij)2 Si' = [ (vj'– vij)2 ] ½
Civic 0.006904 0.083
Saturn 0.001629 0.040
Ford 0.000361 0.019
Mazda 0.002228 0.047
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Steps of TOPSIS
Step 5: Calculate the relative closeness to
the ideal solution Ci* = S'i / (Si* +S'i )
S'i /(Si*+S'i) Ci*
Civic 0.083/0.112 0.74 BEST
Saturn 0.040/0.097 0.41
Ford 0.019/0.109 0.17
Mazda 0.047/0.105 0.45
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