Analytic Hierarchy Process (What is AHP)

Analytic Hierarchy Process (AHP) is one of Multi Criteria decision making method that was originally developed by Prof. homas !. "aaty. #n short$ it is a method to derive ratio scales from paired comparisons. he input can be obtained from actual measurement such as price$ weight etc.$ or from sub%ective opinion such as satisfaction feelings and preference. AHP allow some small inconsistency in %udgment because human is not always consistent. he ratio scales are derived from the principal &igen vectors and the consistency inde' is derived from the principal &igen value. (on)t worry if you don)t understand yet about all of those terminologies above because the purpose of this tutorial is to e'plain that in a very simple way. *ou %ust need to read on and at the end you will understand.

Pair-wise Comparison comparison?)

(What

is

pair-wise

+ow let me e'plain what paired comparison is. #t is always easier to e'plain by an e'ample. "uppose we have two fruits Apple and ,anana. # would like to ask you$ which fruit you like better than the other and how much you like it in comparison with the other. !et us make a relative scale to measure how much you like the fruit on the left (Apple) compared to the fruit on the right (,anana).

#f you like the apple better than banana$ you thick a mark between number - and . on left side$ while if you favor banana more than apple$ then you mark on the right side. /or instance # strongly favor banana to apple then # give mark like this

+ow suppose you have three choices of fruits. hen the pair wise comparison goes as the following

*ou may observe that the number of comparisons is a combination of the number of things to be compared. "ince we have 0 ob%ects (Apple$ ,anana and Cheery)$ we have 0 comparisons. able below shows the number of comparisons. able 12 +umber of comparisons +umber of things number of comparisons 7 3 0 0 4 6 5 -7 6 -5 1 3-

he scaling is not necessary - to . but for 8ualitative data such as preference$ ranking and sub%ective opinions$ it is suggested to use scale - to .. #n the ne't section you will learn how to analy9e this paired comparisons

Making Comparison Matrix (How to make reciprocal matrix?)

,y now you know how to make paired comparisons. #n this section you will learn how to make a reciprocal matri' from pair wise comparisons. /or e'ample :ohn has 0 kinds of fruits to be compared and he made sub%ective %udgment on which fruit he likes best$ like the following

;e can make a matri' from the 0 comparisons above. ,ecause we have three comparisons$ thus we have 0 by 0 matri'. he diagonal elements of the matri' are always - and we only need to fill up the upper triangular matri'. How to fill up the upper triangular matri' is using the following rules2 1. If the judgment value is on the left side of 1, we put the actual judgment value. 3. If the judgment value is on the right side of 1, we put the reciprocal value . Comparing apple and banana$ :ohn slightly favor banana$ thus we put in the row -

column 3 of the matri'. Comparing Apple and Cherry$ :ohn strongly likes apple$ thus we put actual %udgment 5 on the first row$ last column of the matri'. Comparing banana and cherry$ banana is dominant. hus we put his actual %udgment on the second row$ last column of the matri'. hen based on his preference values above$ we have a reciprocal matri' like this

o fill the lower triangular matri'$ we use the reciprocal values of the upper diagonal. #f is the element of row column of the matri'$ then the lower diagonal is filled

using this formula

hus now we have complete comparison matri'

+otice that all the element in the comparison matri' are positive$ or +e't section will discuss about how you will use this matri'.

Priority Vectors (How to compute Eigen Value and Eigen vector?)

Having a comparison matri'$ now we would like to compute priority vector$ which is the normali9ed &igen vector of the matri'. #f you would like to know what the meaning of &igen vector and &igen value is and how to compute them manually$ go to my other tutorial and then return back here. he method that # am going to e'plain in this section is only an appro'imation of &igen vector (and &igen value) of a reciprocal matri'. his appro'imation is actually worked well for small matri' and there is no guarantee that the rank will not reverse because of the appro'imation error. +evertheless it is easy to compute because all we need to do is %ust to normali9e each column of the matri'. At the end # will show the error of this appro'imation.

"uppose we have 0 by 0 reciprocal matri' from paired comparison

;e sum each column of the reciprocal matri' to get

hen we divide each element of the matri' with the sum of its column$ we have normali9ed relative weight. he sum of each column is -.

he normali9ed principal &igen vector can be obtained by averaging across the rows

he normali9ed principal &igen vector is also called priority vector . "ince it is normali9ed$ the sum of all elements in priority vector is -. he priority vector shows relative weights among the things that we compare. #n our e'ample above$ Apple is 3<.3<=$ ,anana is 64.04= and Cherry is 1.0<=. :ohn most preferable fruit is ,anana$ followed by Apple and Cheery. #n this case$ we know more than their ranking. #n fact$

the relative weight is a ratio scale that we can divide among them. /or e'ample$ we can say that :ohn likes banana 3.31 (>64.04?3<.3<) times more than apple and he also like banana so much <.13 (>64.04?1.0<) times more than cheery. Aside from the relative weight$ we can also check the consistency of :ohn)s answer. o do that$ we need what is called Principal &igen value. Principal &igen value is obtained from the summation of products between each element of &igen vector and the sum of columns of the reciprocal matri'.

Computation and the meaning of consistency are e'plained in the ne't section. As a note$ # put the comparison matri' into Matlab to see how different is the result of numerical computation of &igen value and &igen vector compared to the appro'imation above.

;e get three &igen vectors concatenated into 0 columns of matri'

he corresponding &igen values are the diagonal of matri'

he largest &igen value is called the Principal &igen value$ that is which is very close to our appro'imation (about -= error). he

principal &igen vector is the &igen vector that corresponds to the highest &igen value.

he sum is -.47<- and the normali9ed principal &igen vector is

his result is also very close to our appro'imation

hus the appro'imation is 8uite good. hus the sum of &igen vector is not one. ;hen you normali9ed an &igen vector$ then you get a priority vector. he sum of priority vector is one. In next section you will learn how to make use of information of principal eige value to measure whether the opinion is consistent.

Consistency Index and Consistency Ratio (What is the meaning o consistent?)

;hat is the meaning that our opinion is consistent@ How do we measure the consistency of sub%ective %udgment@ At the end of this section will be able to answer those 8uestions.

!et us look again on :ohn)s %udgment that we discussed in the previous section. #s :ohn %udgment consistent or not@

/irst he prefers ,anana to Apple. hus we say that for :ohn$ ,anana has greater value than Apple. ;e write it as . +e't$ he prefers Apple to Cherry. /or him$ Apple has greater value than Cherry. ;e write it as . "ince and $ logically$ we hope that or ,anana must be preferable than Cherry. his logic of preference is called transitive property. #f :ohn answers in the last comparison is transitive (that he like ,anana more than Cherry)$ then his %udgment is consistent. An the contrary$ if :ohn prefers Cherry to ,anana then his answer is inconsistent. hus consistency is closely related to the transitive property. A comparison matri' is said to be consistent if for all $ and .

However$ we shall not force the consistency. /or e'ample$ has value and has value $ we shall not insist that must have value . his too much consistency is undesirable because we are dealing with human %udgment. o be called consistent $ the rank can be transitive but the values of %udgment are not necessarily forced to multiplication formula .

Prof. "aaty proved that for consistent reciprocal matri'$ the largest &igen value is e8ual to the number of comparisons$ or . hen he gave a measure of

consistency$ called Consistency #nde' as deviation or degree of consistency using the following formula

hus in our previous e'ample$ we have $ thus the consistency inde' is

and three comparisons$ or

Bnowing the Consistency #nde'$ the ne't 8uestion is how do we use this inde'@ Again$ Prof. "aaty proposed that we use this inde' by comparing it with the appropriate one. he appropriate Consistency inde' is called Candom Consistency #nde' ( ). He randomly generated reciprocal matri' using scale $ $ D$ $ D$ <$ . (similar to

the idea of ,ootstrap) and get the random consistency inde' to see if it is about -7= or less. he average random consistency inde' of sample si9e 577 matrices is shown in the table below able <2 Candom Consistency #nde' ( n 3 7 0 4 ) 5 6 1 < . -7

C# 7

7.5< 7.. -.-3 -.34 -.03 -.4- -.45 -.4.

hen$ he proposed what is called Consistency Catio$ which is a comparison between Consistency #nde' and Candom Consistency #nde'$ or in formula

#f the value of Consistency Catio is smaller or e8ual to -7=$ the inconsistency is acceptable. #f the Consistency Catio is greater than -7=$ we need to revise the sub%ective %udgment. /or our previous e'ample$ we have have fruit preference is consistent. "o far$ in AHP we are only dealing with paired comparison of criteria or alternative but not both. #n ne't section$ # show an e'ample to use both criteria and alternative in two levels of AHP. and for is 7.5<$ then we

. hus$ :ohn)s sub%ective evaluation about his

Illustrative example (how to compute in a hierarch!?)

ull

#n this section$ # show an e'ample of two levels AHP. he structure of hierarchy in this e'ample can be drawn as the following

!evel 7 is the goal of the analysis. !evel - is multi criteria that consist of several factors. *ou can also add several other levels of sub criteria and subEsub criteria but # did not use that here. he last level (level 3 in figure above) is the alternative choices. *ou can see again able - for several e'amples of Foals$ factors and alternative choices. he lines between levels indicate relationship between factors$ choices and goal. #n level - you will have one comparison matri' corresponds to pairEwise comparisons between 4 factors with respect to the goal. hus$ the comparison matri' of level - has si9e of 4 by 4. ,ecause each choice is connected to each factor$ and you

have 0 choices and 4 factors$ then in general you will have 4 comparison matrices at level 3. &ach of these matrices has si9e 0 by 0. However$ in this particular e'ample$ you will see that some weight of level 3 matrices are too small to contribute to overall decision$ thus we can ignore them. ,ased on 8uestionnaire survey or your own paired comparison$ we make several comparison matrices. Click here if you do not remember how to make a comparison matri' from paired comparisons. "uppose we have comparison matri' at level - as table below. he yellow color cells in upper triangular matri' indicate the parts that you can change in the spreadsheet. he diagonal is always - and the lower triangular matri' is filled using formula .

able .2 Paired comparison matri' level - with respect to the goal Criteria A B C D S ! A -.77 7.00 7.-4 7.--.5. B 0.77 -.77 7.37 7.-4 4.04 C 1.77 5.77 -.77 7.00 -0.00 D ..77 1.77 0.77 -.77 37.77 Priority Vector 57.39% 29.13% 9.03% 4.45% -77.77=

>4.36.3$ C# > 7.7<.1$ CC > ...1= G -7= (acceptable)

he priority vector is obtained from normali9ed &igen vector of the matri'. Click here if you do not remember how to compute priority vector and largest &igen value from a comparison matri'. C# and CC are consistency #nde' and Consistency ratio respectively$ as # have e'plained in previous section. /or your clarity$ # include again here some part of the computation2

( hus$ AB because 8uite consistent)

Candom Consistency #nde' (C#) is obtained from able <. "uppose you also have several comparison matrices at level 3. matrices are made for each choice$ with respect to each factor. able -72 Paired comparison matri' level 3 with respect to /actor A Choice H * I "um " -.77 -.77 7.-4 3.-4 # -.77 -.77 7.00 3.00 $ 1.77 0.77 -.77 --.77 Priority Vector 51.05% 3%.93% 10.01% -77.77= hese comparison

>0.-74$ C# > 7.75$ CC > <..1= G -7= (acceptable)

able --2 Paired comparison matri' level 3 with respect to /actor , Choice " # $ S ! " -.77 5.77 3.77 <.77 # 7.37 -.77 7.37 -.47 $ 7.57 5.77 -.77 6.57 Priority Vector 11.49% 70.2%% 1%.22% -77.77=

>0.7<<$ C# > 7.74$ CC > 1.5<= G -7= (acceptable)

;e can do the same for paired comparison with respect to /actor C and (. However$ the weight of factor C and ( are very small (look at able . again$ they are only about .= and 5= respectively)$ therefore we can assume the effect of leaving them out from further consideration is negligible. ;e ignore these two weights as set them as 9ero. "o we do not use the paired comparison matri' level 3 with respect to /actor C and (. #n that case$ the weight of factor A and , in able . must be ad%usted so that the sum still -77= Ad%usted weight for factor A >

Ad%usted weight for factor , >

hen we compute the overall composite weight of each alternative choice based on the weight of level - and level 3. he overall weight is %ust normali9ation of linear combination of multiplication between weight and priority vector.

able -32 Averall composite weight of the alternatives &actor A (Ad%usted) (ei)ht Choice " Choice # 0.663 5-.75= 0<..0= &actor B 0.337 --.4.= 17.3<= 37.72% 49.49% Co!'osite (ei)ht

Choice $

-7.7-=

-<.33=

12.7%%

/or this e'ample$ we get the results that choice * is the best choice$ followed by H as the second choice and the worst choice is I. he composite weights are ratio scale. ;e can say that choice * is 0.<1 times more preferable than choice I$ and choice * is -.0 times more preferable than choice H. ;e can also check the overall consistency of hierarchy by summing for all levels$ with weighted consistency inde' (C#) in the nominator and weighted random consistency inde' (C#) in the denominator. Averall consistency of the hierarchy in our e'ample above is given by

(Acceptable)

&inal *e!ar+
,y now you have learned several introductory methods on multi criteria decision making (MC(M) from simple cross tabulation$ using rank$ and weighted score until AHP. Jsing Analytic Hierarchy Process (AHP)$ you can convert ordinal scale to ratio scale and even check its consistency.