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# LOC 1 AC 3 - Network Analysis For Management & Production

Introduction
Analytic Hierarchy Process (AHP) is one of Multi Criteria decision making method that was originally developed by Prof. Thomas L. Saaty. In short, it is a method to derive ratio scales from paired comparisons. The input can be obtained from actual measurement such as price, weight etc., or from subjective opinion such as satisfaction feelings and preference. AHP allow some small inconsistency in judgment because human is not always consistent. The ratio scales are derived from the principal Eigen vectors and the consistency index is derived from the principal Eigen value.

## Paired Wise Comparison

It is always easier to explain by an example. Suppose we have two fruits Apple and Banana. I would like to ask you, which fruit you like better than the other and how much you like it in comparison with the other. Let us make a relative scale to measure how much you like the fruit on the left (Apple) compared to the fruit on the right (Banana).

Comparison Matrix
For example there are 3 kinds of fruits to be compared and we made subjective judgment on which fruit we likes best, like the following:

We can make a matrix from the 3 comparisons above. Because we have three comparisons, thus we have 3 by 3 matrix. The diagonal elements of the matrix are always 1 and we only need to fill up the upper triangular matrix. How to fill up the upper triangular matrix is using the following rules:
1. 2.

If the judgment value is on the left side of 1, we put the actual judgment value. If the judgment value is on the right side of 1, we put the reciprocal value .

Comparing apple and banana, we slightly favor banana, thus we put in the row 1 column 2 of the matrix. Comparing Apple and Cherry, we strongly likes apple, thus we put actual judgment 5 on the first row, last column of the matrix. Comparing banana and cherry, banana is dominant. Thus we put the actual judgment on the second row, last column of the matrix. Then based on our preference values above, we have a reciprocal matrix like this

To fill the lower triangular matrix, we use the reciprocal values of the upper diagonal. If is the element of row column of the matrix, then the lower diagonal is filled using this formula

## Thus now we have complete comparison matrix

Notice that all the element in the comparison matrix are positive, or .

Priority Vector
Having a comparison matrix, now we would like to compute priority vector, which is the normalized Eigen vector of the matrix. The method that explained in this section is only an approximation of Eigen vector (and Eigen value) of a reciprocal matrix. This approximation is actually worked well for small matrix size and there is no guarantee that the rank will not reverse because of the approximation error. Nevertheless it is easy to compute because all we need to do is just to normalize each column of the matrix. Suppose we have 3 by 3 reciprocal matrix from paired comparison

## We sum each column of the reciprocal matrix to get

Then we divide each element of the matrix with the sum of its column, we have normalized relative weight. The sum of each column is 1.

The normalized principal Eigen vector can be obtained by averaging across the rows

Result
In our example above, Apple is 28.28%, Banana is 64.34% and Cherry is 7.38%. The most preferable fruit is Banana, followed by Apple and Cheery. In this case, we know more than their ranking. In fact, the relative weight is a ratio scale that we can divide among them. For example, we can say that we like banana 2.27 (=64.34/28.28) times more than apple and he also like banana so much 8.72 (=64.34/7.38) times more than cheery.

Classroom Exercise
Consider the problem of choosing which alternative to construct in a case, where an old road connection through a city has run out of capacity and a new improved connection is needed. The decision makers can choose between: A new by-pass road on the northern side of the city (A1), an upgrade of the existing connection (A2), or a new by-pass road on the southern side of the city (A3).

At level 1 the focus is overall an improved road connection. Level 2 compromises the criteria that contribute to the decision making: Landscape (L), environment (E), urban planning (UP) and accessibility (AC). Level 3 consist of the three solution possibilities: A1, A2 and A3. It is obvious that each criterion in level 2 should contribute differently to the focus. The decision can be made on the relative importance among four criteria by pair-wise comparisons, due to the fact that pairwise comparisons are much easier to make than a comparison of four criteria simultaneously. In the road problem, there are four criteria in level 2. The decision maker then makes six pair-wise judgments among four criteria with respect to level 1 (4 (4 1))/ 2 = 6): L:E E:UP 7:1 1:3 L:UP E:AC 1:1 2:1 L:AC UP:AC 7:1 5:1

The next step for the decision maker is to make pair-wise comparisons of the three alternatives in level 3 with respect to four criteria in level 2: For L A1:A2 1:3 A1:A3 2:1 A2:A3 5:1 For E A1:A2 3:1 A1:A3 1:5 A2:A3 1:7 For UP A1:A2 1:5 A1:A3 2:1 A2:A3 7:1 For AC A1:A2 1:3 A1:A3 1:5 A2:A3 1:3

Solution The computation of the overall priority for alternative A1 is as follows: 0.48 (0.23) + 0.10 (0.19) + 0.36 (0.17) + 0.06 (0.10) = 0.1966 Similarly, they are 0.6020 and 0.2014 for A2 and A3 respectively. Therefore the decision makers choice would be to make an upgrade of the existing road (A2), if the decision was only to be based on these criteria.

(KIV)

LEARNING OUTCOME 1 LINEAR PROGRAMMING METHOD FOR CONSTRUCTION MANAGEMENT & PRODUCTION (AC 3)
SIMPLEX METHOD Since most realistic application of linear programming involve far more than 2 variables, there is a need for a solution procedure other than the graphical methods, called simplex method. The simplex method is an algebraic procedure for solving systems of equations where an objective function is optimized. It is an iterative process, which identifies a feasible starting solution. The procedure then searches to see whether there exists a better solution. Better is measured by whether the value of the objective function can be improved. If a better solution is signalled, the search resumes. The generation of each successive solution requires solving a system of linear equations. The search continues until no further improvement is possible in the objective function. Requirement of Simplex Method (1)All constraints must be stated as equations. (2)The right side of a constraint cannot be negative. (3)All variables are restricted to non-negative values. (1) All constraints must be stated as equations (a) Case 1 ( Constraint) A slack variable (S) is added to the left side of the constraint. ( 2x1 + 3x2 50 2x1 + 3x2 + S1 = 50) (b) Case 2 ( Constraint) A surplus variable (E) and an artificial variable (A) is added to the left side of the constraint. (x 1 + x2 25 x1 + x2 E1 + A1 = 25) (c) Case 3 ( = Constraint) A artificial variable (A) is added to the left side of the constraint. Rules of Simplex Method (a)Optimally check in Maximization Problem The optimal solution has been found if all row (0) coefficients for the variables are greater than or equal to 0. If any row (0) coefficient for the variables are negative for non-basic variables, a better solution can be found by assigning a positive quantity to these variable.

(b)New basic variable in Maximization Problem The non-basic variable which will replace a basic variable is the one having the most negative row (0) coefficient. (c) The basic variable to be replaced is found by determining the row I associated with min (bi/aik), which is the maximum number of units that can be introduced of the incoming basic variable. Summary of Simplex Procedure For maximization case (1)Add slack variable (S) to each constraint and the objective function, and place the variable coefficient and right-hand side constants in a simplex tableau. (2)Identify the initial solution by declaring each of the slack variables as basic variables. All other variables are non-basic in the initial solution. (3)Determine whether the current solution is optimal by applying rule 1(0). If it is optimal, stop ! If it is not optimal proceed to step 4. (4)Determine the non-basic variable which should become a basic variable in the next solution by applying rule 2 (max (-) coefficient in row(0)). (5)Determine the basic variable which should be replaced in the next solution by applying rule 3, (min b i / aik ratio where aik > 0) (6)Apply the guassian elimination operation to generate the new solution (or new tableau). Go to step 2.

Given,

maximize Subject to
key column x2 -6 2 6

## z = 5x1 + 6x2 3x1 + 2x2 120 4x1 + 6x2 260

S1 0 1 0 S2 0 0 1 bi 0 120 260 Row No. bi/x2 R's R' 0 = R0 + 6R' 2 0 R' 1 = R1 - 2R' 2 1 =120/2 = 60 =260/6 = 43.33 R' 2 = 1/6 R2 2

## Table 1-1 Basic Variable S1 S2 - D

z 1 0 0

x1 -5 3 4

to 0 to 0 to 1 (Starter)

## z = 1 + 6(0) Variable = 1 = 0 - 2(0) S1 - D = 0 = 0 x 1/6 S2 to x2 = 0

x1 x2 = -5 + 6(2/3) = -6 + 6(1) = -1 =0 = 3 - 2(2/3) = 2 - 2(1) = 5/3 =0 = 4 x 1/6 = = 6 x 1/6 2/3 =1 key column

bi/x1

to 1 (Starter)

## z = 1 + 6(0) Variable = 1 = 3/5 x 0 S1 to x1 = 0 = 0-2/3(0) =0 x2 Answer z = 280

x1 = -1 + 1 =0 = 3/5 x 5/3 =1

S2 bi Row No. bi/x = 1 + -2/5 = 260 + 20 All positive = 3/5 = 280 (settled) 0 = 3/5 x -(2/3) = -= 3/5 x -(33.33) 2/5 = 20 1 = 2/3-2/3(1) = 1 -2/3(0) = 0 -2/3(3/5) = 1/6 -2/3(-2/5) = 43.33 -2/3(20) =0 =1 = -2/5 = 13/30 = 30 2 x1 = 20 x2 = 30

R's

Questions

## 1. Given, Maximize Subject to

z = 2x1 + 12x2 + 8x3 2x1 + 2x2 + x3 100 x1 2x2 + 5x3 80 10x1 + 5x2 + 4x3 300

## (Answer : x1 = 0, x2 = 35, x3 = 30, S1 = 0, S2 = 0 and S3 = 5)

2. Estimate the optimum / maximum profit for the construction of 3 types of houses as below due to the limited resources: Housing Type Labour A Labour B Labour C Profit Margin (hrs) (hrs) (hrs) (RM/unit) X 30 40 60 3000 Y 20 50 30 2200 Z 40 20 50 2800 Limited hours offered monthly 1200 hours for Labour A 1600 hours for Labour B 2400 hours for Labour C