ANALYTIC
HIERARCHY PROCESS
ANALYTIC HIERARCHY PROCESS (AHP)
• AHP was developed by Thomas L. Saaty
• a structured technique for organizing and analysing complex
decisions, based on mathematics and psychology.
• the AHP helps decision makers find one that best suits their
goal and their understanding of the problem.
• Example: transportation mode, distributor location, supplier,
or machine.
• The first step in AHP is to decide the relative importance of
the objectives.
ANALYTIC HIERARCHY PROCESS (AHP)
ANALYTIC HIERARCHY PROCESS (AHP)
PAIRWISE COMPARISON VALUES
Comparing objective i and objective j (where i is assumed to be at
least as important as j), give a value aij.
set aii= 1. Furthermore, if we set aij = k , then we set aji= 1/k
WEIGHTING CALCULATION
1. Determine the overall weight to each criteria: this weight will
be between 0 and 1, and the total weights will add up to 1.
We do that by taking each entry and dividing by the sum of
the column it appears in, and then get the relative weights
of each criteria (=average across rows)
2. Evaluate all the alternatives on each criteria. Again
normalize the matrices(divide by the sums of the columns,
and average across rows to get the relative weights of each
alternative with regards to each criteria).
3. Recalling our overall weights, we can now get a value for
each alternatives (after the consistency test).
AHP CONSISTENCY TEST
1. Calculate max for each weight:
Multiply the comparison matrix with the weight matrix, then divide by the
weight, and calculate the average.
2. Calculate the consistency index (CI)
3. Calculate the consistency ratio (CR)
where
If the value of Consistency Ratio is smaller or equal to 10%,
the inconsistency is acceptable. If the Consistency Ratio is g
reater than 10%, we need to revise the subjective judgment.
AHP EXAMPLE
❖ The purchasing manager of UNPAR needs to
choose three alternative computer suppliers, the
criteria are: price, service quality, delivery, and
product quality.
❖ The manager compares each pair of criteria and
the pairwise comparison is:
Criteria Matrix
Price Service Delivery Product
Quality Quality
Price 1 3 2 2
Service 1/3 1 ¼ ¼
Quality
Delivery ½ 4 1 ½
Product 1/2 4 2 1
Quality
The manager compares each pair of suppliers for
each criteria:
Price
Supplier A Supplier B Supplier C
Supplier A 1 1/3 ¼
Supplier B 1 ½
Supplier C 1
Service Quality
Supplier A Supplier B Supplier C
Supplier A 1 1/4 1/6
Supplier B 1 1/3
Supplier C 1
Delivery
Supplier A Supplier B Supplier C
Supplier A 1 2 8
Supplier B 1 6
Supplier C 1
Product Quality
Supplier A Supplier B Supplier C
Supplier A 1 1/3 4
Supplier B 1 7
Supplier C 1
Price
A B C
A 1 1/3 ¼
B 3 1 ½
C 4 2 1
8 10/3 7/4 A B C Average
A 0.125 0.1 0.143 0.123
B 0.375 0.3 0.286 0.320
C 0.5 0.6 0.571 0.557
1.000
CONSISTENCY
1. max Calculation:
1 1 / 3 1 / 4 0.369
0.123 3 + 0.320 1 + 0.5571 / 2 = 0.967
4 2 1 1.688
▪ 0.369 : 0.123 = 3.006
0.967 : 0.320 = 3.019
1.688 : 0.557 = 3.030
▪ max = (3.006 + 3.019 + 3.030) : 3 = 3.018
2. CI = (3.018 – 3) : 2 = 0.009
3. CR = 0.009 / 0.58 = 0.016 → consistent
Supplier’s Weights:
Price Service Delivery Product
Quality Quality
Supplier A 0.123 0.087 0.593 0.265
Supplier B 0.320 0.274 0.341 0.656
Supplier C 0.557 0.639 0.065 0.080
Criteria Weights:
0.398 0.085 0.218 0.299
VALUE OF EACH ALTERNATIVE:
Supplier A = 0.398 (0.123)+ 0.085 (0.087)+
0.218 (0.593)+ 0.299 (0.265)
= 0.265
Supplier B = 0.421
Supplier C = 0.314
• B is the best supplier
