CHAPTER 9: MULTICRITERIA DECISION MAKING

Discuss the techniques that can be used to solve problems when they have multiple
objectives: goal programming, the analytical hierarchy process, and scoring models.
Unquestionably, the main reason for the existence of the majority of entities is
due to profit. That is why most of the techniques in management science focus on either
maximizing profit or minimizing the cost. However, maximizing profit or minimizing cost
is not the only objective for companies. As they say, gaining income is not the only thing
that matters. Various factors consist of the entire organization. It ranges from all of its
assets, liabilities, equities, revenues, and expenses. Hence, decision-making does not
only revolve with profit maximization. It encompasses everything related to the whole
system of the entities. Moreover, firms do not only stick to one goal. It has a variety of
projects, departments, and proposal which has its purpose. Due to this, management
science multiple criteria, which address various decision-makings.
In multiple criteria techniques, it acknowledges not just one objective, which is
either maximizing profit or minimizing cost, but it tries to resolve enormous decision-
makings. For instance, a company may contemplate whether to start expanding by
establishing new branches or introducing new products. In deciding, the firm considers
many factors that may affect the organization. The firm addresses issues regarding the
budget, date, time, and effort. In line with this, three techniques can be used in solving
problems about multiple objectives, which are goal programming, the analytical
hierarchy process, and scoring models. 
First, goal programming is one of the three techniques. Accordingly, it inscribes
processes that include multiple goals instead of a single objective. It is described as
similar to linear programming since goal programming contains an objective function,
decision variables, and constraints. Rehman (2016) stated that the "goal programming
approach establishes a specific numeric goal for each of the objectives and then
attempts to achieve each goal sequentially up to a satisfactory level rather than an
optimal level". Further, this technique is similarly graphed using QM for Windows and
Excel. Generally, the procedures and methods are the same as the linear programming
model, but it has multiple objectives, which are referred to as goals. Common goals that
companies want to achieve include maximizing profit, increasing wages paid to
employees, upgrading product quality, and reducing product cost. Another proof of its
connection with linear programming is that the first step in goal programming is
converting the constraints of the former technique to goals. 
 Digging deeper, formulating goal programming has facts to be noted. Here, deviational
variables denoted as d - and d+ constitutes the equalities of goal constraints. Further, a
positive deviational variable is an amount by which a goal level is exceeded. On the
other hand, a negative deviational variable is an amount by which a goal level is
underachieved. Note that at least one or both deviational variables in a goal constraint
must equal zero. Moreover, the objective function in a goal programming model probes
to minimize the deviation from goals in the order of the goal priorities. As for the
objective function, terms are not summed because the deviational variables usually
have various units of measure. Even if the goal programming solves issues with various
objectives, know that it still has its discrepancies. Thus, the solutions it provides do not
always achieve every goal established making it not optimal. However, it still provides
the best or most satisfactory solution possible.
Moving on, the second multi-criteria method introduced in management science
is the Analytical Hierarchy Process (AHP). Generally, AHP is a technique for ranking
decision alternatives and choosing the most suitable one given various criteria. It can be
inferred that AHP answers the question starting from "which one?" instead of the "how"
problems answered by goal programming. For instance, a woman buying brand new
cosmetics can choose from a wide range of brands and select which among them is the
best. In this method, the decision-maker has to consider every factor such as cost,
quality, and longevity in choosing which to acquire or purchase. Further, AHP ranks
every decision alternative through numeric scores using the performance in terms of
achieving criteria as a basis. 
Specific steps are enumerated to determine the process in the AHP method. To
enumerate, a company shall follow these mathematical steps to arrive at an AHP-
recommended decision. First, develop a pairwise comparison matrix for each decision
alternative for each criterion. Second, synthesization starts, which prioritizes the
judgment options within every criterion. Synthesization happens with the following
steps: (a) sum the values in each column of the pairwise comparison matrices; (b)
divide each value in each column of the pairwise comparison matrices by the
corresponding column sum—these are the normalized matrices; (c) average the values
in each row of the normalized matrices—these are the preference vectors; (d) combine
the vectors of preferences for each criterion, from the second step, into one preference
matrix that shows the preference for each site for each criterion. Next to synthesization
is developing a pairwise comparison matrix for the criteria. Fourth, the company shall
compute the normalized matrix by dividing each value in each column of the matrix by
the corresponding column sum. Fifth, develop the preference vector by computing the
row averages for the normalized matrix. Sixth, compute an overall score for each
decision alternative by multiplying the criteria preference vector by the criteria matrix.
Lastly, rank the decision alternatives, based on the magnitude of their scores computed
in step six. 
Also, the pairwise comparison is a tool used in assessing every alternative in
AHP. Elaborately speaking, comparing two alternatives depending on a criterion to
determine the preferred one happens in a pairwise comparison. Further, Geographic
Information Technology Training Alliance (2013) asserted that this method "allows a
concentration on the comparison of only two criteria at a time. Thereby, the effort
required to compare each criterion with every other one is increasing rapidly when
handling many classes." 
The last among the three techniques that can be used to solve problems
regarding multiple objectives is the Scoring Models. If goal programming is closely
similar to linear programming, then scoring models is the one that is almost the same
with AHP. It is a mathematical method, which creates the basis for risk stratification. As
for this technique, decision criteria are weighted according to their relative value, and
each decision alternative is graded in terms of how well it meets the standards. Thus, it
is a simpler mathematical method than that of AHP. Furthermore, scoring models are
continuously being automated. In that case, the model extracts all data that provides the
scoring and automatically matches the outlined levels of the decision-making process.
This does not influence the result of the scoring model but provides possibilities to
further optimize the decision-making method. 
To top it all, profit is not everything for a business. It may be true that earning
income is the main goal of an entity, but many things are considered to attain business
objectives. Decision-making within the company ranges from purchasing materials to
growing by expansion. These problems cannot be solved by either linear programming
or integer programming. With this, goal programming, the analytical hierarchy process,
and scoring models help a lot in managing multi-criteria problems.

Referenes:
Geographic Information Technology Training Alliance. (2013). Weighting by pairwise
comparison. Retrieved from:
http://www.gitta.info/Suitability/en/html/Normalisatio_learningObject3.html
Rehman, K. (2016). Goal programming. Retrieved from:
https://www.slideshare.net/hakeemrehman/goal-programming-68158871