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The Analytic Network Process (ANP)

for Decision Making and Forecasting


with Dependence and Feedback
• With feedback the alternatives depend on the criteria as
in a hierarchy but may also depend on each other.

• The criteria themselves can depend on the alternatives


and on each other as well.

• Feedback improves the priorities derived from judgments


and makes prediction much more accurate.

1
Linear Hierarchy
Goal

Criteria component,
cluster
(Level)
Subcriteria
element
Alternatives
A loop indicates that each
element depends only on itself.

2
Feedback Network with components having
Inner and Outer Dependence among Their Elements
Arc from component
C4 to C2 indicates the
C4 outer dependence of the
elements in C2 on the
elements in C4 with respect
to a common property.
C1

Feedback C2
C3

Loop in a component indicates inner dependence of the elements in that component


with respect to a common property.

3
Inner and Outer Dependence
and the Control Hierarchy
In a network, the elements in a component may be people (e.g., individuals in the
White House) and those in another component may also be people (e.g., individuals
in Congress).

The elements in a component may influence other elements in the same component
(inner dependence) and those in other components (outer dependence) with respect
to each of several properties. We want to determine the overall influence of all the
elements.

In that case we must organize the properties or criteria and prioritize them in the
framework of a control hierarchy (or a network), perform comparisons and
synthesize to obtain the priorities of these properties. We then derive the influence
of elements in the feedback system with respect to each of these properties. Finally,
we weight the resulting influences by the importance of the properties and add to
obtain the overall influence of each element.

4
Main Operations of the ANP

• Relative measurement: Reciprocal relation

• Judgments: Homogeneity

• Hierarchy or Network: Structure of problem; the control hierarchy

• Priorities, Dominance and Consistency: Eigenvector

• Composition, Additive to also handle dependence through the supermatrix

• Supermatrix: Dependence

• Neural Firing: Fredholm Kernel and Eigenfunctions

5
Inner and Outer Dependence
and the Control Hierarchy cont.
Control hierarchies fall in four groups:

• Benefits, Costs, Risks, & Opportunities.

Benefits and costs measure the positive and negative contributions or importance
of the alternatives if they happen, but will they happen?

Risks and opportunities measure the likelihood that the alternatives will happen
and make positive and respectively negative contributions.

Each one is a hierarchy (or a network) by itself. The overall priorities of the
alternatives with respect to each of these are then combined by forming the ratios:
Benefits x Opportunities
Costs x Risks
to obtain their final overall priorities for a decision.

6
Weighting The Components
In the ANP one often needs to prioritize the influence of the components
themselves on each other component to which the elements belong. This
influence is assessed through paired comparisons with respect to
a control criterion.

The priority of each component is used to weight the priorities of all the
elements in that component. The reason for doing this is to enable us to
perform feedback multiplication of priorities by other priorities in a cycle, an
infinite number of times. The process would not converge unless the resulting
matrix of priorities is column stochastic (each of its columns adds to one).

To see that one must compare clusters in real life, we note that if a person is
introduced as the president it makes much difference, for example, whether he
or she is the President of the United States or the president of a local labor
group.

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Functional - Structural Criteria
Independence - Dependence

1--Criteria completely independent from alternatives - Absolute


Measurement, Intensities and Standards.

2--Criteria quasi dependent on alternatives - Relative


Measurement: Rescale the weight of a criterion by the number of
alternatives and their measurement (normalization).

3--Criteria completely dependent on alternatives - Feedback


network - the Supermatrix.

8
Why ANP?
• The power of the Analytic Network Process (ANP) lies in its use of
ratio scales to capture all kinds of interactions and make accurate
predictions, and, even further, to make better decisions. So far, it has
proven itself to be a success when expert knowledge is used with it to
predict sports outcomes, economic turns, business, social and political
decision outcomes.

• The ANP is a mathematical theory that makes it possible for one to


deal systematically with all kinds of dependence and feedback. The
reason for its success is the way it elicits judgments and uses
measurement to derive ratio scales. Priorities as ratio scales are a
fundamental kind of number amenable to performing the basic
arithmetic operations of adding within the same scale and multiplying
different scales meaningfully as required by the ANP.

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Mutual Influence Among Several Elements

In order to distinguish among the influence of several homogeneous elements that is exerted on a single
element, the number of influencing elements cannot be more than a few. The reason is that the element
that is influenced must be able to distinguish between the various influences and respond to them in
relatives terms. If their number is large, the relative influence of each would be a small part of the total.
On the other hand, if the number of elements is small, the relative influence of each one on any other
single element would be large and distinguishable. A small change in the influence of any of these
elements would not alter the receiving elements estimation of its overall influence. When the number of
elements is large, they need to be put in different clusters.

Unidirectional Influence
A single powerful element may influence numerous other elements that do not influence it in return or
influence each other. If many elements influence a single element without feedback, their number can
be arbitrarily large.

10
The Questions to Answer About the
Dominance of Influence
Two kinds of questions encountered in the ANP:

1. Given a criterion, which element has greater influence (is more dominant) with
respect to that criterion?

Use one of the following two questions throughout an exercise.

2. Given a criterion and given an element X in any cluster, which element in the
same cluster or a different cluster has greater influence on X with respect to that
criterion?

2’. Given a criterion and given an element X in any cluster, which element in the
same or in a different cluster is influenced more by X with respect to that criterion.

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Example of Control Hierarchy

Optimum Function of A System

Environmental Economic Social

Influence is too general a concept and must be specified in


terms of particular criteria. It is analyzed according to each
criterion and then synthesized by weighting with these priorities
of the “control” criteria belonging to a hierarchy or to a system.

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The Supermatrix
Take a control criterion. The priorities of the elements derived from paired comparisons with
respect to that control criterion are arranged both vertically and horizontally according to
components. The elements in each component are listed for that component in a matrix known
as the Supermatrix. Each vector taken from a paired comparison matrix is part of the column of
the supermatrix representing the impact with respect to the control criterion of the elements of
that component on a single element of the same or another component listed at the top.

The Weighted Supermatrix


All the clusters are pairwise compared according to their influence on a given cluster X with
respect to the control criterion. This yields a vector of priorities of the impact of all the clusters
on a given criterion. Each component of a vector is used to weight all the elements in the block
of column priorities of the supermatrix corresponding to the impact of the elements of that
cluster on X. The process is repeated for all the clusters resulting in a weighted supermatrix.

In each block of the supermatrix, a column is either a normalized eigenvector with possibly
some zero entries, or all of its elements are equal to zero. In either case it is weighted by the
priority of the corresponding cluster on the left. If it is zero, that column of the supermatrix
must be normalized after weighting by the cluster’s weights. This operation is equivalent to
assigning a zero value to the cluster on the left when weighting a column of a block with zero
entries and then re-normalizing the weights of the remaining clusters.
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The Limiting Supermatrix
The weighted supermatrix is now column stochastic from which one then derives the
limiting supermatrix. There are four major cases to consider in deriving the limiting
supermatrix depending on the simplicity or multiplicity of the principle eigenvalue and on
the reducibility and irreducibility of the matrix.

How to Read Off the Answer


The desired priorities of the criteria and alternatives with respect to the corresponding
control criterion can be read off the supermatrix as given or they may be structurally
adjusted according to the number of elements in each cluster and appropriately re-weighted.

How to Combine Benefits, Costs, Opportunities, Risks


One must first combine the supermatrices for the benefits, then for the costs, then for the
opportunities and then for the risks by using the weights of the control criteria for each.
One then takes the ratio
benefits x opportunities / costs x risks
for the alternatives and selects the alternative with the largest ratio.

14
Networks and the Supermatrix
c1 c2 cN
e11e12 e1n1 e21e22 e2n2 eN1eN2 eNnN
e11
c1 e12
W11 W12 W1N
e1n1
e21
W=
c2 e22 W21 W22 W2N
e2n2
eN1
eN2
cN WN1 WN2 WNN
eNuN

15
where
(j1) (j2) (jnj)
Wi1 Wi1 Wi1

(j1) (j2) (jnj)


Wij = Wi2 Wi2 Wi2

(j1) (j2) (jnj)


Wini Wini Wini

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Supermatrix of a Hierarchy

0 0 0 0 0 0
W21 0 0 0 0 0
W=
0 W32 0 0 0 0

0 0 0 Wn-1, n-2 0 0
0 0 0 0 Wn, n-1 I

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0 0 0 0 0
0 0 0 0 0

Wk=
0 0 0 0 0
Wn,n-1 Wn-1,n-2 … W32 W21 Wn,n-1 Wn-1,n-2 ... W32 Wn,n-1 Wn-1,n-2 Wn,n-1 I

for k>n-1

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The School Hierarchy as Supermatrix
Goal Learning Friends School life Vocational training College preparation Music classes A B C
Goal 0 0 0 0 0 0 0 0 0 0
Learning 0.32 0 0 0 0 0 0 0 0 0
Friends 0.14 0 0 0 0 0 0 0 0 0
School life 0.03 0 0 0 0 0 0 0 0 0
Vocational training 0.13 0 0 0 0 0 0 0 0 0
College preparation 0.24 0 0 0 0 0 0 0 0 0
Music classes 0.14 0 0 0 0 0 0 0 0 0
Alternative A 0 0.16 0.33 0.45 0.77 0.25 0.69 1 0 0
Alternative B 0 0.59 0.33 0.09 0.06 0.5 0.09 0 1 0
Alternative C 0 0.25 0.34 0.46 0.17 0.25 0.22 0 0 1

Limiting Supermatrix & Hierarchic Composition


Goal Learning Friends School life Vocational training College preparation Music classes A B C
Goal 0 0 0 0 0 0 0 0 0 0
Learning 0 0 0 0 0 0 0 0 0 0
Friends 0 0 0 0 0 0 0 0 0 0
School life 0 0 0 0 0 0 0 0 0 0
Vocational training 0 0 0 0 0 0 0 0 0 0
College preparation 0 0 0 0 0 0 0 0 0 0
Music classes 0 0 0 0 0 0 0 0 0 0
Alternative A 0.3676 0.16 0.33 0.45 0.77 0.25 0.69 1 0 0
Alternative B 0.3781 0.59 0.33 0.09 0.06 0.5 0.09 0 1 0
Alternative C 0.2543 0.25 0.34 0.46 0.17 0.25 0.22 0 0 1

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Criteria Independent from Alternatives

When the criteria do not depend on the alternatives, the


latter are kept out of the supermatrix and are evaluated in
the usual hierarchic way by the distributive or ideal
modes to make possible rank preservation or reversal as
desired. The priorities of the criteria in terms of which
the alternatives are evaluated hierarchically are taken
from the limiting supermatrix. Here again benefit, cost,
opportunity, and risk evaluation can be made to
determine the ranks of the alternatives.

20
Structural Adjust
After & Before the Final Results

After computing the limiting results, if it is desired to group


together elements from two or more clusters to determine their
relative influence, the priorities of each cluster may be multiplied
by the relative number of elements in that cluster to the total
number in the set of clusters and then the entire set is normalized.

One may think to do such structural adjustment in the weighting


process of the original supermatrix. There may be occasions
where that is what should be done.

21
The Management of a Water Reservoir

Here we are faced with the decision to choose


one of the possibilities of maintaining the water
level in a dam at: Low (L), Medium (M) or High
(H) depending on the relative importance of Flood
Control (F), Recreation (R) and the generation of
Hydroelectric Power (E) respectively for the three
levels. The first set of three matrices gives the
prioritization of the alternatives with respect to the
criteria and the second set, those of the criteria in
terms of the alternatives.

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A Feedback System with Two Components

Flood Recreation Hydro-


Control Electric
Power

Low Intermediate High


Level Level Level

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1) Which level is best for flood control?
Flood Control

Low Med High Eigenvector


Low 1 5 7 .722
Medium 1/5 1 4 .205
High 1/7 1/4 1 .073
2) Which level is best for recreation?
Consistency Ratio = .107 Recreation

3) Which level is best for power generation? Low Med High Eigenvector
Low 1 1/7 1/5 .072
Power Generation Medium 7 1 3 .649
High 5 1/3 1 .279
Low Med High Eigenvector
Low 1 1/5 1/9 .058 Consistency Ratio = .056
Medium 5 1 1/5 .207
High 9 5 1 .735

Consistency Ratio = .101

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Low Level Dam
F R E Eigenvector
Flood Control 1 3 5 .637 1) At Low
Recreation 1/3 1 3 .258 Level, which
Hydro-Electric 1/5 1/3 1 .105 attribute is
Power satisfied best?
Consistency Ratio = .033
Intermediate Level Dam
2) At F R E Eigenvector
Intermediate Flood Control 1 1/3 1 .200
Level, which Recreation 3 1 3 .600
attribute is Hydro-Electric 1 1/3 1 .200
satisfied best? Power
Consistency Ratio = .000
High Level Dam
F R E Eigenvector 3) At High
Flood Control 1 1/5 1/9 .060 Level, which
Recreation 5 1 1/4 .231 attribute is
Hydro-Electric 9 4 1 .709 satisfied best?
Power
Consistency Ratio = .061

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The six eigenvectors were then introduced as
columns of the following stochastic supermatrix.

F R E L M H

F 0 0 0 .637 .200 .060


R 0 0 0 .258 .600 .231
E 0 0 0 .105 .200 .709
L .722 .072 .058 0 0 0
M .205 .649 .207 0 0 0
H .073 .279 .735 0 0 0

One must ensure that all columns sum to unity exactly.

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The final priorities for both, the height of the dam and for the criteria were
obtained from the limiting power of the supermatrix. The components were
not weighted here because the matrix is already column stochastic and
would give the same limiting result for the ratios even if multiplied by the
weighting constants.

Its powers stabilize after a few iterations. We have

F R E L M H

F 0 0 0 .241 .241 .241


R 0 0 0 .374 .374 .374
E 0 0 0 .385 .385 .385
L .223 .223 .223 0 0 0
M .372 .372 .372 0 0 0
H .405 .405 .405 0 0 0

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The columns of each block of this matrix are
identical, so that in the top right block we can
read off the overall priority of each of the three
criteria from any column, and read off the overall
priorities of the three alternatives from any
column of the bottom left block. It is clear from
this analysis that for the kind of judgments
provided, there is preference for a high dam with
priority .405 for hydroelectric power generation
with priority .385.

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Choosing a Car: Foreign or Domestic?
Cost A E J Eigenvector American C R D Eigenvector
A 1 5 3 .637 C 1 3 4 .634
E 1/5 1 1/3 .105 R 1/3 1 1 .192
J 1/3 3 1 .258 D 1/4 1 1 .174

Consistency Ratio = .033 Consistency Ratio = .008

Repair Cost A E J Eigenvector European C R D Eigenvector


A 1 5 2 .582 C 1 1 1/2 .250
E 1/5 1 1/3 .109 R 1 1 1/2 .250
J 1/2 3 1 .309 D 2 2 1 .500

Consistency Ratio = .003 Consistency Ratio = .008

Durability A E J Eigenvector Japanese C R D Eigenvector


A 1 1/5 1/3 .105 C 1 2 1 .400
E 5 1 3 .637 R 1/2 1 1/2 .200
J 3 1/3 1 .258 D 1 2 1 .400

Consistency Ratio = .033 Consistency Ratio = .000

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Original Supermatrix
C R D A E J
C 0 0 0 .634 .250 .400
R 0 0 0 .192 .250 .200
D 0 0 0 .174 .500 .400
A .637 .582 .105 0 0 0
E .105 .109 .637 0 0 0
J .258 .309 .258 0 0 0
Limiting Supermatrix
C R D A E J
C 0 0 0 .464 .464 .464
R 0 0 0 .210 .210 .210
D 0 0 0 .326 .326 .326
A .452 .452 .452 0 0 0
E .279 .279 .279 0 0 0
J .269 .269 .269 0 0 0

Choose an American car. Cost is the dominant criterion.

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Date and Strength of Recovery of U.S. Economy

Primary Factors Conventional Economic


adjustment Restructuring

Consumption (C) Financial Sector (FS)


Subfactors
Exports (X) Defense Posture (DP)
Investment (I) Global Competition (GC)
Fiscal Policy (F)
Monetary Policy (M)
Confidence (K)

Adjustment Period
Required for
Turnaround 3 months 6 months 12 months 24 months

The U.S. Holarchy of Factors for Forecasting Turnaround in Economic Stagnation

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Table 1: Matrices for subfactor importance relative to primary factors influencing the Timing of Recovery

Panel A: Which subfactor has the greater potential to influence Conventional Adjustment and how strongly?

Vector
C E I K F M Weights
Consumption (C) 1 7 5 1/5 1/2 1/5 0.118
Exports (E) 1/7 1 1/5 1/5 1/5 1/7 0.029
Investment (I) 1/5 5 1 1/5 1/3 1/5 0.058
Confidence (K) 5 5 5 1 5 1 0.334
Fiscal Policy (F) 2 5 3 1/5 1 1/5 0.118
Monetary Policy (M) 5 7 5 1 5 1 0.343

Panel B: Which subfactor has the greater potential to influence Economic Restructuring and how strongly?

Vector
FS DP GC Weights

Financial
Sector (FS) 1 3 3 0.584
Defense
Posture (DS) 1/3 1 3 0.281
Global
Competition (GC) 1/3 1/3 1 0.135

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Table 2: Matrices for relative influence of subfactors on periods of adjustment (months) (Conventional Adjustment)

For each panel below, which time period is more likely to indicate a turnaround if the relevant factor is the sole driving force?

Panel B: Relative importance of targeted time periods for


Panel A: Relative importance of targeted time periods for
exports to drive a turnaround
consumption to drive a turnaround
3 6 12 24 Vec. Wts. 3 6 12 24 Vec. Wts.
3 months 1 1/5 1/7 1/7 .043 3 months 1 1 1/5 1/5 .083
6 months 5 1 1/5 1/5 .113 6 months 1 1 1/5 1/5 .083
12 months 7 5 1 1/3 .310 12 months 5 5 1 1 .417
24 months 7 5 3 1 .534 24 months 5 5 1 1 .417

Panel C: Relative importance of targeted time periods for Panel D: Relative importance of targeted time periods for
investment to drive a turnaround fiscal policy to drive a turnaround
3 6 12 24 Vec. Wts. 3 6 12 24 Vec. Wts.
3 months 1 1 1/5 1/5 .078 3 months 1 1 1/3 1/5 .099
6 months 1 1 1/5 1/5 .078 6 months 1 1 1/5 1/5 .087
12 months 5 5 1 1/3 .305 12 months 3 5 1 1 .382
24 months 5 5 3 1 .538 24 months 5 5 1 1 .432

Panel E: Relative importance of targeted time periods for Panel F: Expected time for a change of confidence
monetary policy to drive a turnaround indicators of consumer and investor activity to support a
turnaround in the economy
3 6 12 24 Vec. Wts. 3 6 12 24 Vec. Wts.
3 months 1 5 7 7 .605 3 months 1 3 5 5 .517
6 months 1/5 1 5 7 .262 6 months 1/3 1 5 5 .305
12 months 1/7 1/5 1 1/5 .042 12 months 1/5 1/5 1 5 .124
24 months 1/7 1/7 5 1 .091 24 months 1/5 1/5 1/5 1 .054

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Table 3: Matrices for relative influence of subfactors on periods of adjustment (months) (Economic Restructuring)

For each panel below, which time period is more likely to indicate a turnaround if the relevant factor is the sole driving force?

Panel A: Financial system restructuring time Panel B: Defense readjustment time


3 6 12 24 Vec. Wts. 3 6 12 24 Vec. Wts.
3 months 1 1/3 1/5 1/7 .049 3 months 1 1/3 1/5 1/7 .049
6 months 3 1 1/5 1/7 .085 6 months 3 1 1/5 1/7 .085
12 months 5 5 1 1/5 .236 12 months 5 5 1 1/5 .236
24 months 7 7 5 1 .630 24 months 7 7 5 1 .630

Panel C: Global competition adjustment time


3 6 12 24 Vec. Wts.
3 months 1 1 1/5 1/5 .078
6 months 1 1 1/5 1/5 .078
12 months 5 5 1 1/3 .305
24 months 5 5 3 1 .538

Table 4: Most likely factor to dominate during a specified time period


Which factor is more likely to produce a turnaround during the specified time period? Conventional Adjustment CA
Restructuring R

Panel A: 3 Months Panel B: 6 Months Panel C: 1 Year Panel D: 2 Years

CA R Vec. Wts. CA R Vec. Wts. CA R Vec. Wts. CA R Vec. Wts.


CA 1 5 .833 CA 1 5 .833 CA 1 1 .500 CA 1 1/5 .167
R 1/5 1 .167 R 1/5 1 .167 R 1 1 .500 R 5 1 .833

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Table 5: The Completed Supermatrix

Conven. Economic. Consum. Exports Invest. Confid. Fiscal Monet. Financ. Defense Global 3 mo. 6 mo. 1 yr.  2 years
Adjust Restruc. Policy Policy Sector Posture Compet.

Conven. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 ¦ 0.833 0.833 0.500 0.167
Adjust ¦
Economic. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 ¦ 0.167 0.167 0.500 0.833
Restru. +--------------------------
------+
Consum. 0.118 ¦ 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
¦
Exports 0.029 ¦ 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
¦
Invest. 0.058 ¦0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
¦
Confid. 0.334 ¦0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
¦
Fiscal 0.118 ¦0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Policy ¦
Monetary 0.343 ¦0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Policy ------+
+----+
Financ. 0.0 ¦0.584¦ 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Sector ¦ ¦
¦ ¦
Defense 0.0 ¦0.281¦ 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Posture ¦ ¦
¦ ¦
Global 0.0 ¦0.135¦ 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Compet. +----+
+------------------------------------------------------------------+
3 months 0.0 0.0 ¦ 0.043 0.083 0.078 0.517 0.099 0.605 0.049 0.049 0.089 ¦ 0.0 0.0 0.0 0.0
¦ ¦
6 months 0.0 0.0 ¦ 0.113 0.083 0.078 0.305 0.086 0.262 0.085 0.085 0.089 ¦ 0.0 0.0 0.0 0.0
¦ ¦
1 year 0.0 0.0 ¦ 0.310 0.417 0.305 0.124 0.383 0.042 0.236 0.236 0.209 ¦ 0.0 0.0 0.0 0.0
¦ ¦
 2 years 0.0 0.0 ¦ 0.534 0.417 0.539 0.054 0.432 0.091 0.630 0.630 0.613 ¦ 0.0 0.0 0.0 0.0

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Table 6: The Limiting Supermatrix

Conven. Economic. Consum. Exports Invest. Confid. Fiscal Monet. Financ. Defense Global 3 mo. 6 mo. 1 yr.  2 years
Adjust Restruc. Policy Policy Sector Posture Compet.

Conven. 0.0 0.0  0.484 0.484 0.484 0.484 0.484 0.484 0.484 0.484 0.484  0.0 0.0 0.0 0.0
Adjust  
Economic 0.0 0.0  0.516 0.516 0.516 0.516 0.516 0.516 0.516 0.516 0.516  0.0 0.0 0.0 0.0
Restru. 

Consum. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.057 0.057 0.057 0.057

Exports 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.014 0.014 0.014 0.014

Invest. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.028 0.028 0.028 0.028

Confid. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.162 0.162 0.162 0.162

Fiscal 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.057 0.057 0.057 0.057
Policy 
Monetary 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.166 0.166 0.166 0.166
Policy 
Financ. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.301 0.301 0.301 0.301
Sector 
Defense 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.145 0.145 0.145 0.145
Posture 
Global 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.070 0.070 0.070 0.070
Compet. 

3 months 0.224 0.224 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

6 months 0.151 0.151 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

1 year 0.201 0.201 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

 2 years 0.424 0.424 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

36
Synthesis/Results
When the judgments were made, the AHP framework was
used to perform a synthesis which produced the following
results. First a meaningful turnaround in the economy
would likely require an additional ten to eleven months,
occurring during the fourth quarter of 1992. This forecast is
derived from weights generated in the first column of the
limiting matrix in Table 6, coupled with the mid-points of
the alternate time periods (so as to provide unbiased
estimates:

.224 x 1.5 + .151 x 4.5 + .201 x 9 + .424 x 18 =


10.45 months from late December 1991/early January 1992

37
The Strength of Recovery

Primary Factors Conventional Economic


Adjustment Restructuring

Subfactors Consumption (C) Financial Sector (FS)


Exports (X) Defense Posture (DP)
Investment (I) Global Competition (GC)
Fiscal Policy (F)
Monetary Policy (M)
Confidence (K)

Very Strong Strong Moderate Weak


(5.5-6.5% GNP) (4.5-5.5% GNP) (3-4.5% GNP) (2-3% GNP)

38
Table 7: Matrices for Primary and Subfactors for Strength of Recovery
Panel A: Which primary factor will be more influential in determining the Strength of Recovery?
Vector
CA R Weights
Conventional
Adjustment (CA) 1 1/5 .167
Restructuring (R) 5 1 .833
Panel B: Which subfactor is more important in influencing Conventional Adjustment?
Vector
C E I K F M Weights
Consumption (C) 1 7 3 1 7 3 0.317
Exports (E) 1/7 1 1/5 1/5 1 1/5 0.037
Investment (I) 1/3 5 1 1/3 1/3 1/5 0.099
Confidence (K) 1 5 3 1 7 3 0.305
Fiscal Policy (F) 1/7 1 3 1/7 1 1/7 0.035
Monetary Policy (M) 1/3 7 5 1/3 7 1 0.207

Panel C: Which subfactor is more important in influencing Economic Restructuring?


Vector
FS DP GC Weights
Financial
Sector (FS) 1 1/5 1/3 0.105
Defense
Posture (DS) 5 1 3 0.637
Global
Competition (GC) 3 1/3 1 0.258
CI = 0.037

39
Table 8: Matrices for relative influence of subfactors on Strength of Recovery (Conventional Adjustment)
For each panel below, which intensity is more likely to obtain if the designated factor drives the recovery?

Panel B: Relative likelihood of the strength of recovery if


Panel A: Relative likelihood of the strength of recovery if
exports drives the expansion
consumption drives the expansion
V S M W Vec. Wts. V S M W Vec. Wts.
Very Strong (V) 1 1 5 7 .423 Very Strong (V) 1 1 1/3 1/5 .095
Strong (S) 1 1 5 7 .423 Strong (S) 1 1 1/3 1/5 .095
Moderate (M) 1/5 1/5 1 3 .104 Moderate (M) 3 3 1 1/3 .249
Weak (W) 1/7 1/7 1/3 1 .051 Weak (W) 5 5 3 1 .560
CI = 0.028
CI = 0.016

Panel C: Relative likelihood of the strength of recovery if Panel D: Relative likelihood of the strength of recovery if
investment drives the expansion confidence drives the expansion
V S M W Vec. Wts. V S M W Vec. Wts.
Very Strong (V) 1 1 1/3 2 .182 Very Strong (V) 1 1 3 5 .376
Strong (S) 1 1 1/3 2 .182 Strong (S) 1 1 3 5 .376
Moderate (M) 3 3 1 6 .545 Moderate (M) 1/3 1/3 1/3 7 .193
Weak (W) 1/2 1/2 1/6 1 .091 Weak (W) 1/5 1/5 1/7 1 .054
CI = 0.0 CI = 0.101

Panel E: Relative likelihood of the strength of recovery if Panel F: Relative likelihood of the strength of recovery if
fiscal policy drive the expansion monetary policy drives the expansion
V S M W Vec. Wts. V S M W Vec. Wts.
Very Strong (V) 1 1 1/5 1 .125 Very Strong (V) 1 1 1/5 1/3 .084
Strong (S) 1 1 1/5 1 .125 Strong (S) 1 1 1/5 1/3 .084
Moderate (M) 5 5 1 5 .625 Moderate (M) 5 5 1 7 .649
Weak (W) 1 1 1/5 1 .125 Weak (W) 3 3 1/7 1 .183
CI = 0.0 CI = 0.101

40
Table 9: Matrices for relative influence of subfactors on Strength of Recovery (Restructuring)
For each panel below, which intensity is more likely to obtain if the designated factor drives the recovery?
Panel A: Relative likelihood of the strength of recovery if Panel B: Relative likelihood of the strength of recovery if
financial sector drives the expansion defense posture drives the expansion
V S M W Vec. Wts. V S M W Vec. Wts.
Very Strong (V) 1 1 1/3 1/5 .095 Very Strong (V) 1 1/3 1/5 1/7 .055
Strong (S) 1 1 1/3 1/5 .095 Strong (S) 3 1 1/3 1/5 .118
Moderate (M) 3 3 1 1/3 .249 Moderate (M) 5 3 1 1/3 .262
Weak (W) 5 5 1/3 1 .560 Weak (W) 7 5 3 1 .565
CI = 0.016 CI = 0.044
Panel C: Relative likelihood of the strength of recovery if
global competition drives the expansion
V S M W Vec. Wts.
Very Strong (V) 1 1 1/3 1/5 .101
Strong (S) 1 1 1/3 1/5 .101
Moderate (M) 3 3 1 1 .348
Weak (W) 5 5 1 1 .449
CI = 0.012
Table 10: Overall Results for Strength of Recovery
% GNP Growth

Very Strong (5.5-6.5) 0.108


Strong (4.5-.5) 0.141
Moderate (3-4.5) 0.290
Weak (2-3) 0.461

% GNP Recovery Rate* 3.6


*% GNP Recovery rate calculated using the relative strength of conventional adjustment and restructuring in Table 5 Panel A
each used to multiply midpoints of % GNP Growth and then summed.

41
Hamburger Model
Estimating Market Share of Wendy’s, Burger King and McDonald’s
with respect to the single economic control criterion

42
How to Pose the Question to
Make Paired Comparisons
• One must answer questions of the following kind: given
McDonald’s (in the Alternatives cluster) is its economic
strength derived more from Creativity or from Frequency
(both in the Advertising cluster)? Conversely, given
Creativity in the Advertising cluster who is more
dominant, McDonald’s or Burger King?
• Then, again, by comparing the dominance impact of the
clusters of Advertising and Quality of Food on the
economic success of McDonald by weighting and
normalizing we can relate the relative effect of elements in
these different clusters.

43
Hamburger Model Supermatrix
Other Quality Advertising Competition
Local: Menu Cleanli Speed Service Location Price Reputa Take Portion Taste Nutri Freq Promo Creativ Wendy’s Burger McDon-
ness tion Out tion uency tion ity King ald’s

Menu Item 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.1930 0.0000 0.0000 0.0000 0.0000 0.3110 0.1670 0.1350 0.1570 0.0510 0.1590
O Cleanliness 0.6370 0.0000 0.0000 0.5190 0.0000 0.0000 0.2390 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.2760 0.1100 0.3330
t Speed 0.1940 0.7500 0.0000 0.2850 0.0000 0.0000 0.0830 0.2900 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0640 0.1400 0.0480
h Service 0.0000 0.0780 0.1880 0.0000 0.0000 0.0000 0.0450 0.0550 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0650 0.1430 0.0240
Location 0.0530 0.1710 0.0000 0.0980 0.0000 0.5000 0.2640 0.6550 0.0000 0.0000 0.0000 0.1960 0.0000 0.7100 0.1420 0.2240 0.1070
e Price 0.1170 0.0000 0.0000 0.0000 0.0000 0.0000 0.0620 0.0000 0.8570 0.0000 0.0000 0.0000 0.8330 0.0000 0.0300 0.2390 0.0330
r Reputation 0.0000 0.0000 0.0810 0.0980 0.0000 0.0000 0.0570 0.0000 0.0000 0.0000 0.0000 0.4930 0.0000 0.1550 0.2070 0.0420 0.2230
Take-Out 0.0000 0.0000 0.7310 0.0000 0.0000 0.5000 0.0570 0.0000 0.1430 0.0000 0.0000 0.0000 0.0000 0.0000 0.0590 0.0510 0.0740
Portion 0.2290 0.0000 0.0000 0.0000 0.0000 0.8330 0.2800 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0940 0.6490 0.5280
Taste 0.6960 0.0000 0.0000 0.0000 0.0000 0.0000 0.6270 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.2800 0.0720 0.1400
Q Nutrition 0.0750 0.0000 0.0000 0.0000 0.0000 0.1670 0.0940 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.6270 0.2790 0.3320
Frequency 0.7500 0.0000 0.0000 0.0000 0.0000 0.1670 0.5500 0.0000 0.0000 0.0000 0.0000 0.0000 0.6670 0.8750 0.6490 0.7090 0.6610
Ad Promotion 0.1710 0.0000 0.0000 0.0000 0.0000 0.8330 0.3680 0.0000 0.0000 0.0000 0.0000 0.5000 0.0000 0.1250 0.0720 0.1130 0.1310
Creativity 0.0780 0.0000 0.0000 0.0000 0.0000 0.0000 0.0820 0.0000 0.0000 0.0000 0.0000 0.5000 0.3330 0.0000 0.2790 0.1790 0.2080
C Wendy's 0.3110 0.5000 0.0990 0.5280 0.0950 0.0950 0.1010 0.1960 0.2760 0.6050 0.5940 0.0880 0.0880 0.1170 0.0000 0.1670 0.2000
o Burger King 0.1960 0.2500 0.3640 0.1400 0.2500 0.2500 0.2260 0.3110 0.1280 0.1050 0.1570 0.1950 0.1950 0.2680 0.2500 0.0000 0.8000
m McDonald’s 0.4930 0.2500 0.5370 0.3330 0.6550 0.6550 0.6740 0.4940 0.5950 0.2910 0.2490 0.7170 0.7170 0.6140 0.7500 0.8330 0.0000
p

Cluster Priorities Matrix


Cluster: Other Quality Advertising Competition
Other 0.198 0.500 0.131 0.187
Quality 0.066 0.000 0.000 0.066
Advertising 0.607 0.000 0.622 0.533
Competition 0.129 0.500 0.247 0.215

44
Weighted Supermatrix
Weighted: Menu Cleanli Speed Service Location Price Reputa Take Portion Taste Nutri Freq Promo Creativ Wendy’s Burger McDon-
ness tion Out tion uency tion ity King ald’s

Menu Item 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0382 0.0000 0.0000 0.0000 0.0000 0.0407 0.0219 0.0177 0.0293 0.0095 0.0297
Cleanliness 0.1262 0.0000 0.0000 0.3141 0.0000 0.0000 0.0473 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0516 0.0205 0.0622
Speed 0.0384 0.4544 0.0000 0.1725 0.0000 0.0000 0.0164 0.1755 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0120 0.0261 0.0090
Service 0.0000 0.0473 0.1138 0.0000 0.0000 0.0000 0.0089 0.0333 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0121 0.0267 0.0045
Location 0.0105 0.1036 0.0000 0.0593 0.0000 0.0990 0.0523 0.3964 0.0000 0.0000 0.0000 0.0257 0.0000 0.0930 0.0265 0.0418 0.0200
Price 0.0232 0.0000 0.0000 0.0000 0.0000 0.0000 0.0123 0.0000 0.4287 0.0000 0.0000 0.0000 0.1091 0.0000 0.0056 0.0446 0.0062
Reputation 0.0000 0.0000 0.0490 0.0593 0.0000 0.0000 0.0113 0.0000 0.0000 0.0000 0.0000 0.0646 0.0000 0.0203 0.0387 0.0078 0.0417
Take-Out 0.0000 0.0000 0.4426 0.0000 0.0000 0.0990 0.0113 0.0000 0.0715 0.0000 0.0000 0.0000 0.0000 0.0000 0.0110 0.0095 0.0138
Portion 0.0151 0.0000 0.0000 0.0000 0.0000 0.0550 0.0185 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0062 0.0428 0.0348
Taste 0.0460 0.0000 0.0000 0.0000 0.0000 0.0000 0.0414 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0185 0.0047 0.0092
Nutrition 0.0050 0.0000 0.0000 0.0000 0.0000 0.0110 0.0062 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0413 0.0184 0.0219
Frequency 0.4554 0.0000 0.0000 0.0000 0.0000 0.1014 0.3338 0.0000 0.0000 0.0000 0.0000 0.0000 0.4149 0.5444 0.3455 0.3773 0.3519
Promotion 0.1038 0.0000 0.0000 0.0000 0.0000 0.5056 0.2233 0.0000 0.0000 0.0000 0.0000 0.3110 0.0000 0.0778 0.0383 0.0601 0.0697
Creativity 0.0474 0.0000 0.0000 0.0000 0.0000 0.0000 0.0498 0.0000 0.0000 0.0000 0.0000 0.3110 0.2071 0.0000 0.1485 0.0953 0.1107
Wendy's 0.0401 0.1974 0.0391 0.2082 0.0950 0.0123 0.0130 0.0773 0.1381 0.6044 0.5940 0.0217 0.0217 0.0289 0.0000 0.0359 0.0429
Burger King 0.0253 0.0987 0.1436 0.0552 0.2500 0.0323 0.0291 0.1226 0.0640 0.1049 0.1570 0.0482 0.0482 0.0662 0.0537 0.0000 0.1718
McDonald ‘s 0.0636 0.0987 0.2118 0.1313 0.6550 0.0845 0.0869 0.1948 0.2976 0.2907 0.2490 0.1771 0.1771 0.1517 0.1611 0.1788 0.0000

Limiting Supermatrix
Synthesized: Menu Cleanli Speed Service Location Price Reputa Take Portion Taste Nutri Freq Promo Creativ Wendy’s Burger McDon-
Global ness tion Out tion uency tion ity King ald’s

Menu Item 0.0234 0.0234 0.0234 0.0234 0.0234 0.0234 0.0234 0.0234 0.0234 0.0234 0.0234 0.0234 0.0234 0.0234 0.0234 0.0234 0.0234
Cleanliness 0.0203 0.0203 0.0203 0.0203 0.0203 0.0203 0.0203 0.0203 0.0203 0.0203 0.0203 0.0203 0.0203 0.0203 0.0203 0.0203 0.0203
Speed 0.0185 0.0185 0.0185 0.0185 0.0185 0.0185 0.0185 0.0185 0.0185 0.0185 0.0185 0.0185 0.0185 0.0185 0.0185 0.0185 0.0185
Service 0.0072 0.0072 0.0072 0.0072 0.0072 0.0072 0.0072 0.0072 0.0072 0.0072 0.0072 0.0072 0.0072 0.0072 0.0072 0.0072 0.0072
Location 0.0397 0.0397 0.0397 0.0397 0.0397 0.0397 0.0397 0.0397 0.0397 0.0397 0.0397 0.0397 0.0397 0.0397 0.0397 0.0397 0.0397
Price 0.0244 0.0244 0.0244 0.0244 0.0244 0.0244 0.0244 0.0244 0.0244 0.0244 0.0244 0.0244 0.0244 0.0244 0.0244 0.0244 0.0244
Reputation 0.0296 0.0296 0.0296 0.0296 0.0296 0.0296 0.0296 0.0296 0.0296 0.0296 0.0296 0.0296 0.0296 0.0296 0.0296 0.0296 0.0296
Take-Out 0.0152 0.0152 0.0152 0.0152 0.0152 0.0152 0.0152 0.0152 0.0152 0.0152 0.0152 0.0152 0.0152 0.0152 0.0152 0.0152 0.0152
Portion 0.0114 0.0114 0.0114 0.0114 0.0114 0.0114 0.0114 0.0114 0.0114 0.0114 0.0114 0.0114 0.0114 0.0114 0.0114 0.0114 0.0114
Taste 0.0049 0.0049 0.0049 0.0049 0.0049 0.0049 0.0049 0.0049 0.0049 0.0049 0.0049 0.0049 0.0049 0.0049 0.0049 0.0049 0.0049
Nutrition 0.0073 0.0073 0.0073 0.0073 0.0073 0.0073 0.0073 0.0073 0.0073 0.0073 0.0073 0.0073 0.0073 0.0073 0.0073 0.0073 0.0073
Frequency 0.2518 0.2518 0.2518 0.2518 0.2518 0.2518 0.2518 0.2518 0.2518 0.2518 0.2518 0.2518 0.2518 0.2518 0.2518 0.2518 0.2518
Promotion 0.1279 0.1279 0.1279 0.1279 0.1279 0.1279 0.1279 0.1279 0.1279 0.1279 0.1279 0.1279 0.1279 0.1279 0.1279 0.1279 0.1279
Creativity 0.1388 0.1388 0.1388 0.1388 0.1388 0.1388 0.1388 0.1388 0.1388 0.1388 0.1388 0.1388 0.1388 0.1388 0.1388 0.1388 0.1388
Wendy's 0.0435 0.0435 0.0435 0.0435 0.0435 0.0435 0.0435 0.0435 0.0435 0.0435 0.0435 0.0435 0.0435 0.0435 0.0435 0.0435 0.0435
{ Burger King
McDonald’s
0.0784
0.1579
0.0784
0.1579
0.0784
0.1579
0.0784
0.1579
0.0784
0.1579
0.0784
0.1579
0.0784
0.1579
0.0784
0.1579
0.0784
0.1579
0.0784
0.1579
0.0784
0.1579
0.0784
0.1579
0.0784
0.1579
0.0784
0.1579
0.0784
0.1579
0.0784
0.1579
0.0784
0.1579

Relative local weights: Wendy’s= 0.156, Burger King =0.281, and McDonald’s=0.566

45
Validation

The same problem worked as a simple and


a complex hierarchy and as a feedback network.

46
Hamburger Model
Synthesized Local: Synthesized Local Cont’d:

Other Menu Item 0.132 Advertising Frequency 0.485


Cleanliness 0.115 Promotion 0.246
Speed 0.104 Creativity 0.267
Service 0.040 Competition Wendy’s 0.156
Location 0.224 Burger King 0.281
Price 0.138 McDonald’s 0.566
Reputation 0.167
Take-Out 0.086
Quality Portion 0.494
Taste 0.214
Nutrition 0.316

Simple Hierarchy Complex Hierarchy Feedback Actual


(Three Level) (Several Levels) Network Market
Share
Wendy’s 0.3055 0.1884 0.156 0.1320
Burger King 0.2305 0.2689 0.281 0.2857
McDonald’s 0.4640 0.5427 0.566 0.5823

47
48
Strategic Planning
for the Future of the
University of Pittsburgh Medical Center
Using the Analytic Network Process(ANP)

49
Evaluate Strategies for the University Health Network to Compete in a Managed Care Environment

Benefits Control Model Costs Control Model Risks Control Model


Benefits Costs Risks

Social Economic Political Social Economic Political Social Economic Political

Social Economic Political Social Economic Political Social Economic Political


Benefits Benefits Benefits Costs Costs Costs Risks Risks Risks
Network Network Network Network Network Network Network Network Network
Submodel Submodel Submodel Submodel Submodel Submodel Submodel Submodel Submodel

50
List of Clusters and Elements (Not all the Clusters appear in all 9 of the sub-models.)
Cluster Names Cluster Elements
Clients Businesses- businesses that offer employees health care plans
Consumers- individuals who purchase their own health coverage
Insurers- companies who sell health insurance
Competition Competitors- other hospitals in Pittsburgh that compete w/ UPMC
Convenience Time- expended by customer scheduling, traveling, and actual waiting room
Safety- safety of location
Internal Stakeholders Physicians- working for UPMC
Administrators- planners, managers, decision makers of UPMC
Alliances- outside organizations, involved: isurers, hospitals, physician networks
Staff- non-physician, non-administrative personel
Public Relations Public Relations- UPMC’s public image: TV, Newspaper, Radio
Quality Specialty quality non-general health services,
Diversity- range of health services offered by UPMC
Care- quality of general health services
Research- quality of research at UPMC
*Strategies Improve and Measure Outcomes- measure effectiveness to improve service
Capitalization- negotiated insurance contracts with fixed payments
Develop a Primary Network- increase number of primary care physicians
Internal Cost Reduction- cut facilities, employees, and high cost procedures
Teach Primary Care- shift focus from curative care to preventive care
Variety of Services Internal Medicine and Surgery- Curative specialty services and hospitalization
Cancer Treatment- cancer treatment cure
Outpatient Care- preventive care and short term medical treatments
*Strategies apperar in every sub-moadel as alternatives of choice 51
Clusters and Elements in the Economic Benefits Sub-model

52
Benefits & Costs

Predicting the Superbowl Winner ‘96 & ‘97

53
Pre-start (early December 1995)
Wild Card Games All predictions correct except for two games below.
Team Benefits Costs B/C

Miami vs. 0.701 0.612 1.145


Buffalo 0.745 0.590 1.263

Indianapolis vs. 0.687 0.622 1.105


San Diego 0.660 0.650 1.015

Detroit vs. 0.625 0.636 0.983


Philadelphia 0.695 0.580 1.198

Atlanta vs. 0.590 0.612 0.964


Green Bay 0.785 0.515 1.524

Second Round

Pittsburgh vs. 0.740 0.581 1.274


Buffalo 0.704 0.605 1.164

Indianapolis vs. 0.695 0.590 1.178 Kansas kicker missed 3 field goals & ruined them.
Kansas City 0.750 0.575 1.304 No way to know his ailments that day.
Green Bay vs. 0.755 0.590 1.280
Was too close to determine the winner.
San Francisco 0.751 0.585 1.284
Green Bay won.
Philadelphia vs. 0.732 0.641 1.142
Dallas 0.759 0.576 1.318

Divisional Playoffs

Dallas vs. 0.742 0.540 1.370


Green Bay 0.756 0.561 1.350

Pittsburgh vs. 0.699 0.555 1.260


Indianapolis 0.741 0.598 1.240

The Super Bowl

Dallas vs. 0.761 0.728 1.045


Pittsburgh 0.748 0.735 1.018

54
Pre-start (early December 1996)
Playoff Predictions The first predictions were wrong
Pre-Start on three games which then
required revision.
Predicted Outcomes

AFC
Team Benefits Costs B/C Winner Las Vegas

Wild Cards
Indianapolis 0.588 0.489 1.2 Pittsburgh
Pittsburgh 0.592 0.477 1.24

Jacksonville 0.601 0.501 1.2 Buffalo Wrong prediction.


Buffalo 0.594 0.487 1.22

Conference Finals
Pittsburgh 0.609 0.479 1.27 Pittsburgh Wrong prediction.
New England 0.516 0.419 1.23

Buffalo 0.551 0.488 1.13 Denver Wrong prediction.


Denver 0.62 0.447 1.39

Pittsburgh 0.633 0.523 1.21 Denver


Denver 0.686 0.5318 1.29

NFC

Wild Cards

Philadelphia 0.557 0.467 1.19 San Francisco


San Francisco 0.621 0.444 1.4

Minnesota 0.545 0.488 1.12 Dallas


Dallas 0.571 0.476 1.2

Conference Finals
San Francisco 0.585 0.5 1.17 Green Bay
Green Bay 0.685 0.46 1.49

Dallas 0.522 0.494 1.06 Carolina


Carolina 0.51 0.448 1.14

Carolina 0.511 0.498 1.03 Green Bay


Green Bay 0.643 0.521 1.23

Super Bowl

Green Bay 0.618 0.457 1.35 Green Bay


Denver 0.556 0.476 1.17

55
Post-start (before Conference Finals)

Playoff Predictions A gains error in one game.

Predicted Outcomes

AFC
Team Benefits Costs B/C Winner Actual

Conference Finals

Jacksonville 0.545 0.488 1.12 Denver


Denver 0.612 0.447 1.37 Jax

Jacksonville 0.576 0.515 1.12 New Eng


New England 0.645 0.519 1.24 NE

Super Bowl

New England 0.627 0.554 1.13


Green Bay 0.653 0.506 1.29 Green Bay

56
The Benefits

The Costs

57
Benefits Supermatrix
Local Weights Offensive Emotions Outside Teams
Global Local QB Ability Running Play Above Coaching Emotions Home Field Road Ahead Dallas Green Bay
Offense QB Ability 0.0297 0.0864 0.8000 .8000 0.8000
Running 0.3140 0.9136 1.0000 0.2000 1.0000 .2000 1.0000 0.2000
Emotions Play Above
Ability 0.0037 0.0309 1.0000
Coaching 0.0235 0.1962 0.7500
Emotional State 0.0923 0.7724 0.2500 1.0000 0.2000
Outside Home Field 0.0433 0.1055 1.0000 0.8000
Road Ahead 0.3670 0.8945 1.0000 1.0000 1.0000 1.0000
Teams Dallas 0.1227 0.9693 0.7500 1.0000 1.0000
Green Bay 0.0039 0.0308 0.2500

CLUSTER WEIGHTS
Offense Emotions Outside Teams
Offense 0.0000 0.2449 0.6442 0.7172
Emotions 0.2176 0.0000 0.0852 0.1947
Outside 0.0914 0.0902 0.0000 0.0881
Team 0.6910 0.6648 0.2706 0.0000

58
Weighted Supermatrix
Cluster Weights Offensive Emotions Outside Teams
Global Local QB Ability Running Play Above Coaching Emotions Home Field Road Ahead Dallas Green Bay
Offense QB Ability 0.0297 0.0864 0.1959 0.5154 0.7125
Running 0.3140 0.9136 0.7308 0.0490 0.7308 0.1288 0.6442 0.1781
Emotions Play Above
Ability 0.0037 0.0309 0.0852
Coaching 0.0235 0.1962 0.0639
Emotional State 0.0923 0.7724 0.0213 0.6885
Outside Home Field 0.0433 0.1055 0.0538 0.3115 0.0219
Road Ahead 0.3670 0.8945 1.0000 1.0000 0.2692 0.0902 0.2153 0.0875
Teams Dallas 0.1227 0.9693 0.4986 0.2706 0.2706
Green Bay 0.0039 0.0308 0.1662

Limiting Benefits Supermatrix


Offensive Emotions Outside Teams
Global Local QB Ability Running Play Above Coaching Emotions Home Field Road Ahead Dallas Green Bay
Offense QB Ability 0.0297 0.0297 0.0297 0.0297 0.0297 0.0297 0.0297 0.0297 0.0297 0.0297 0.0297
Running 0.3140 0.3140 0.3140 0.3140 0.3140 0.3140 0.3140 0.3140 0.3140 0.3140 0.3140
Emotions Play Above
Ability 0.0037 0.0037 0.0037 0.0037 0.0037 0.0037 0.0037 0.0037 0.0037 0.0037 0.0037
Coaching 0.0235 0.0235 0.0235 0.0235 0.0235 0.0235 0.0235 0.0235 0.0235 0.0235 0.0235
Emotional State 0.0923 0.0923 0.0923 0.0923 0.0923 0.0923 0.0923 0.0923 0.0923 0.0923 0.0923
Outside Home Field 0.0433 0.0433 0.0433 0.0433 0.0433 0.0433 0.0433 0.0433 0.0433 0.0433 0.0433
Road Ahead 0.3670 0.3670 0.3670 0.3670 0.3670 0.3670 0.3670 0.3670 0.3670 0.3670 0.3670
Teams Dallas 0.1227 0.1227 0.1227 0.1227 0.1227 0.1227 0.1227 0.1227 0.1227 0.1227 0.1227
Green Bay 0.0039 0.0039 0.0039 0.0039 0.0039 0.0039 0.0039 0.0039 0.0039 0.0039 0.0039

59
Costs Supermatrix
Local Weights Offensive Emotions Outside Teams
Play
Immature Not Full beyond Past Mental
Global Local Road Ahead Players Strength Cinderella Ability Failures State Weather Dallas Green Bay
Offense Road Ahead 0.1529 0.4034 0.8000 0.8000 0.7500
Immature Players 0.0000 0.0000 0.2000
Not Full Strength 0.2261 0.5966 1.0000 0.2000 1.0000 0.2000 1.0000 0.2500 0.8000
History Cinderella 0.0011 0.0041 1.0000 0.7500
Play Bey Ability 0.2002 0.7278 0.8333 0.7500 0.2500
Past Failures 0.0738 0.2683 0.1667 0.2500 1.0000
Outside Mental State 0.0121 0.0673 0.8571 0.8333 1.000
Weather 0.1683 0.9332 1.0000 0.1429 1.0000 0.1667
Teams Dallas 0.1653 1.0002 1.0000 1.0000 1.0000
Green Bay 0.0000 0.0000

CLUSTER WEIGHTS
Offense Emotions Outside Teams
Offense 0.0000 0.3614 0.6267 0.7172
Emotions 0.0877 0.0000 0.0936 0.1947
Outside 0.1392 0.0650 0.0000 0.0881
Team 0.7731 0.5736 0.2797 0.0000

60
Weighted Supermatrix
Cluster Weighted Offensive Emotions Outside Teams
Play
Immature Not Full beyond Past Mental
Global Local Road Ahead Players Strength Cinderella Ability Failures State Weather Dallas Green Bay
Offense Road Ahead 0.1529 0.4034 0.2891 0.5014 0.5379
Immature Players 0.0000 0.0000 0.1434
Not Full Strength 0.2261 0.5966 1.0000 0.0723 1.0000 0.1253 0.6267 0.1793 0.5738
History Cinderella 0.0011 0.0041 0.0936
Play Bey Ability 0.2002 0.7278 0.8333 0.0702 0.1460
Past Failures 0.0738 0.2683 0.1667 0.0234 0.1947 0.0487
Outside Mental State 0.0121 0.0673 0.8571 0.0734 0.0881
Weather 0.1683 0.9332 1.0000 0.1429 0.0147
Teams Dallas 0.1653 1.0002 0.2797 0.2797
Green Bay 0.0000 0.0000

Limiting Costs Supermatrix


Offensive Emotions Outside Teams
Play
Immature Not Full beyond Past Mental
Global Local Road Ahead Players Strength Cinderella Ability Failures State Weather Dallas Green Bay
Offense Road Ahead 0.1529 0.1529 0.1529 0.1529 0.1529 0.1529 0.1529 0.1529 0.1529 0.1529 0.1529 0.1529
Immature Players 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
Not Full Strength 0.2261 0.2261 0.2261 0.2261 0.2261 0.2261 0.2261 0.2261 0.2261 0.2261 0.2261 0.2261
History Cinderella 0.0011 0.0011 0.0011 0.0011 0.0011 0.0011 0.0011 0.0011 0.0011 0.0011 0.0011 0.0011
Play Bey Ability 0.2002 0.2002 0.2002 0.2002 0.2002 0.2002 0.2002 0.2002 0.2002 0.2002 0.2002 0.2002
Past Failures 0.0738 0.0738 0.0738 0.0738 0.0738 0.0738 0.0738 0.0738 0.0738 0.0738 0.0738 0.0738
Outside Mental State 0.0212 0.0212 0.0212 0.0212 0.0212 0.0212 0.0212 0.0212 0.0212 0.0212 0.0212 0.0212
Weather 0.1683 0.1683 0.1683 0.1683 0.1683 0.1683 0.1683 0.1683 0.1683 0.1683 0.1683 0.1683
Teams Dallas 0.1653 0.1653 0.1653 0.1653 0.1653 0.1653 0.1653 0.1653 0.1653 0.1653 0.1653 0.1653
Green Bay 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000

61
Benefits Intensity Priorities Costs Intensity Priorities

The Road Ahead (0.153):


Quarterback (0.030):
Low Effect (0.085) Somewhat (0.271) GB,D High Effect (0.644)
Average (0.091) Good (0.281) High Ability (0.691)GB,D
Not at Full Strength
Running Game (0.314):
(0.226): Some Big Injury
Average (0.084) Good (0.211)GB High Ability (0.705)D
Few Injuries (0.091) Injuries (0.218) Problems (0.644) GB,D
Play Above Potential (0.004):
Playing Beyond Ability (0.200):
Average (0.075) Good (0.229)D High Play Level (0.696)GB
Not a factor (0.094) GB,D May Falter (0.288) Venerable (0.627)
Coaching Ability
Past Failures (0.074): Can’t get
to Inspire (0.023):
Good History (0.082) GB Mixed Past (0.236)D it Gone (0.682)
Not A lot (0.078) Somewhat (0.205)D Heroic (0.717)GB
Mental State
Emotional State (0.092):
of Preparedness (0.012): May be
Apathy (0.082) Mediocre (0.236) Excitement (0.682)GB,D
Ready (0.122)GB Hurt (0.230)D Unready (0.648)
Home Field
Cinderalla Team (0.001): Good Team
Advantage (0.043): Significant
Not Cinderalla (0.082) GB,D Lucky (0.236) It’s Midnight (0.682)
Neutral (0.105) Some Effect (0.258)GB Effect (0.637)D
Weather Sensitivity (0.168): Small High
Very
Anything Goes (0.095)D Sensitivity (0.250)GB Sensitivity (0.655)
The Road Ahead (0.367): Some Effect (0.236)D Confident (0.682)GB
No Effect (0.082)
Dallas’ Effect (0.165):
Small (0.163) Medium (0.297) High (0.540)GB,D
Dallas’ Effect on the Ultimate Greatly
Outcome (0.123): Medium (0.280) Influenced (0.627)GB,D Green Bay’s Effect (0.000)
Low Effect (0.094) Small (0.105)D Medium (0.258) Big Effect (0.637)GB

Green Bay’s Effect on the Ultimate Greatly Immature Players (0.000) Some Young
Outcome (0.004): Medium (0.258) Influenced (0.637)GB,D Veterans (0.082)D Experience (0.236)GB Players (0.682)
Not Much (0.105)

Each of the two teams obtained a total score from the intensities.

62
Illustrative Considerations in the Evaluation
of 1996 Dallas - Green Bay Game
For the Benefits Model:

- With respect to Green Bay, Quarterback is equally to moderately more important than Dallas. Here we
are comparing an aspect of the Green Bay team to their opponent, Dallas effectively, we are asking
ourselves, which is more important to Green Bay’s success, the fact that they have Brett Favre, or the fact
that they are playing Dallas. The judgment was made that while Favre is an outstanding quarterback, the
fact that he is facing Dallas may be enough to counteract his abilities.

- With respect to Dallas, the Road Ahead is strongly more important than Home Field Advantage. The
Road Ahead refers to future games that the team may have to play if the team continues on. Here, the
relative ease of the road ahead for Dallas, based on the record of the AFC in the Super Bowl, causes it to
be less important than the fact that Dallas is playing Green Bay, possibly its biggest obstacle to winning
the Super Bowl, on its home turf.

- With respect to Dallas, Running Game is equally to moderately stronger than Quarterback. This
judgment is based on the fact that while Dallas’ quarterback is excellent the team’s Running Game is quite
often the league’s best.

- With respect to Dallas, Quarterback is strongly to very strongly more important than Coaching
Inspiration. The basis for this is the fact that Barry Switzer has exhibited no great gift for inspiration, the
team simply is full of talent, especially in the quarterback position.

63
For the Costs Model:

- With respect to Green Bay, Mental State is strongly more important than Weather Sensitivity, simply because Green Bay’s Mental State could be more easily called
into question (may not be tough enough) than their Weather Sensitivity (they are very insensitive to poor weather conditions.

- With respect to Dallas, Mental State is moderately more important than Weather Sensitivity. While the team is not highly Weather Sensitive, their arrogant attitudes
causes us a bit of concern that it may be their undoing.

- With respect to Green Bay, Not at Full Strength is moderately more important than The Road Ahead. The basis for this being that Reggie White, a very important
player on the team, is not 100%, and this is likely to have a larger impact than any AFC team that Green Bay might meet in the Super Bowl because, as we stated
before, AFC teams do not traditionally pose a threat. Conversely, if we looked at an AFC matchup, the Road Ahead would in most cases have a large impact due to
the fact that the AFC teams are usually unsuccessful against the NFC teams in the Super Bowl.

- With respect o Green Bay, Dallas is strongly more important than Cinderella. This translates to mean that any Cinderella story that Green Bay may be enjoying is
likely to be overshadowed by the fact that they are playing Dallas. While Green Bay is not widely considered to be a Cinderella, the label would have a larger effect
on a team like the Indianapolis Colts when they played Kansas City.

- With respect to Dallas, Not at Full Strength is strongly more important than Immature Players. While Dallas has many veterans, its biggest problem in this
comparison could be injuries to key players such as Charles Haley.

- With respect to Dallas, Past Failures are equally important as Play Beyond Ability. Not only is Dallas playing up to its potential, it has a few grave failures of the
past to look back on.

- Now that we have looked at several examples of judgments, we can move on to the results of the model. The elements in the model are given weights based on our
judgment. We can rate the teams using information that we have collected. For instance, if Green Bay’s passing statistics are traditionally low against Dallas, Green
Bay’s likelihood of success against Dallas is comprised by the fact that the team relies heavily on that kind of play. We determined that passing is important to Green
Bay in our judgments, and find that their passing suffers against Dallas in the statistical data that we collected.

Conclusion

It is our hope to use this model to forecast future Super Bowl competitions. Undoubtedly, there will be additional modifications. This basic ideas learned here can
be used to forecast the outcome of other competitive games. It appears that the use of intangibles is significantly more important in the forecast than the strict
accuracy of the statistics, although one cannot do without the statistics which tell more about performance than about attitude and environment.

64
Prediction of the 1997 Australian Tennis Open

Two models were used to predict the matches for the top 16 ranked players in the tournament. In the first
model, a feedback network modeled past performance. Here, we examined performances of players in
previous tournaments. The factors and weights were then included in the second model.

In the second model, a hierarchy was developed to model the intensities that will be used in the ratings
module to rate the players. Past Performance from the network model in the first stage was the first
criterion added. Another two criteria: Technique and Conditioning were also included.

Prediction:

7 of the top 8 players were correctly predicted to meet in the final rounds of the tournament with the final
between Sampras and Chang. In reality, the final was a match between Moya and Sampras, with the top
seed winning the outcome. As Moya was ranked 58th in the world prior to the start of the tournament, he
was not even included in the model.

65
Sampras 0.658
Chang 0.638
Becker 0.516
Agassi 0.512
Ivanisevic 0.483
Krajicek 0.460
Muster 0.468
Courier 0.462
Kafelnikov 0.438
Martin 0.422
Washington 0.421
Enqvist 0.398
Ferreira 0.374
Rios 0.366
Costa 0.334
mantilla 0.329

66
Hong Kong Competes with Singapore
and somewhat less with Tokyo
as Financial Center in Asia
in the 21st Century

Gang Hu (Tianjin), Chia-Shuan Huang (Taiwan), Hong Li (Beijing), Thomas Saaty (Pittsburgh),
Torsten Schmidt (Germany), and Yu-Chan Wang (Taiwan).

67
The Purpose
The purpose of this project is to study the potential impact imposed through the takeover of Hong
Kong by China in 1997. The analysis focuses on the following questions:

• What set of criteria does an Asian location have to meet in order to be a Financial Center?

• Which city is the best candidate for the Financial Center in the Asia-Pacific region in 1996?

• What is the most likely policy of the Chinese government towards Hong Kong after 1997?

• What impact does the Chinese policy have towards Hong Kong as a Financial Center?

• Which city is the most likely candidate to be the Financial Center is the Asia-Pacific region in
the year 2000?

68
The Approach
These five questions are studied with the methodology and technique provided by a combination
of the AHP and ANP. A dual-model approach was developed. The first model, the “Financial
Center model” which is an ANP model, was used to examine the first two of the above questions.
The second model, the “Mainland China Policy model” is an AHP model, used to focus on the
third question above to generate a policy package most likely to be adopted by the Chinese
government. Based on changed in the political, economic, and social environments incurred by
the estimated policy package, the “Financial Center model” was re-evaluated. The fourth and fifth
questions above are thus answered.

The two models complement one another because:

1. The Financial Center model provides the relevant factors for a focused examination
under the China model in order to find the relevant factors which may be changed by
the Chinese government, and

2. The China model provides a package of feasible (for mainland China) and likely
policies to be adopted by the Chinese government after 1997. Based on the package of
policies, a second evaluation of the Financial Center model was made in order to
estimate the future status of Hong Kong as a Financial Center.

69
Influencing Factors
A).Economic-Benefits: 1. Tax.
1. Geographic advantage. 2. Corruption.
2. Free flow of information. 3. Protection from government.
3. Free flow of people. F).Social-Costs:
4. Free flow of capital. 1. Environment.
5. Internationalization. 2. Corruption.
6. Investment. 3. Protection from government.
7. Educated workforce. G).Economic-Opportunities:
8. Convertible currencies. 1. Investment.
9. Assistance from government. 2. Access to potential market.
11. Modern infrastructure. 3. Regional economic growth,
12. Deregulated market. membership of international
B).Political-Benefits: organizations (GATT.WTO).
1. Efficient government. H).Political- Opportunities:
2. Independent legal system. 1. Political credit.
3. Assistance from government. 2. Investment.
4. Free flow of people. 3. Membership of international
5. Free flow of information. organization (GATT,WTO).
C).Social-Benefits: I).Social-Opportunities:
1. Free flow of people. 1. Social wealth.
2. Free flow of information. 2. Access to potential market.
3. Educated workforce. J).Political-Risks:
4. Open culture. 1. Political instability.
5. Internationalized language. 2. Instability of local government.
6. Availability of business 3. Political restriction.
professionals. K).Economic-Risks:
D).Economic-Costs: 1. Instability of local financial market.
1. Labor cost. 2. Inflation.
2. Corruption. 3. Competition from local business.
3. Protection from government. L).Social-Risks:
4. Operating cost. 1. Industry resistance.
5. Tax. 2. Public industry.
E).Political-Costs: 3. Instability of local society.

70
The Set of Four Control Hierarchies

Benefits Control Model Opportunities Control Model

*
Costs Control Model Risks Control Model

*
71
72
73
Economic Benefits Sub-Model

74
Results

There are twelve supermatrices associated with the


complete model. With each of these supermatrices
is associated a cluster priority matrix, a weighted
supermatrix, and a limiting supermatrix from which
the priorities of the three contending centers are
derived. These twelve sets of priorities are
weighted by the priorities of the corresponding
control criteria and summed to obtain the final
ranking.

75
The output from the first Financial Center model
We assume that all the situation will remain the same after 1997. In other words, the
main land China government will adopt a set of feasible policies toward Hong Kong. Based on
this assumption, we made the judgments. After synthesis, we got the results below:
Benefits Opportunities
Economic Political Social Economic Political Social
Hong Kong 0.4131 0.5034 0.4416 Hong Kong 0.4096 0.3813 0.4511
Singapore 0.2836 0.1503 0.2164 Singapore 0.2874 0.2935 0.2227
Tokyo 0.3033 0.3465 0.342 Tokyo 0.303 0.3252 0.3261

Costs Risks
Economic Political Social Economic Political Social
Hong Kong 0.2393 0.1922 0.2519 Hong Kong 0.3086 0.4278 0.4387
Singapore 0.2804 0.3625 0.1803 Singapore 0.2186 0.4387 0.2365
Tokyo 0.4803 0.4453 0.5678 Tokyo 0.4728 0.1335 0.3248

The overall result is listed below:


Alternatives Rank (B*O)/(C*R)
Hong Kong 1 1.6498
Singapore 2 0.906
Tokyo 3 0.5338
It is clear that Hong Kong has the highest priority, which means if mainland China
government adopt all the policies described above toward Hong Kong, it will remain to be the
financial center in the Asia-Pacific region.

76
Likely Policies Followed by China
Affecting the Future of Hong Kong

About 50 potential Chinese policies were identified and


ranked in a hierarchy. The most likely policies were
identified and the network sub-models were re-assessed
given this information. The hierarchy and the policies are
shown next.

77
Sample Hierarchy for Assessing Benefit Intensities

78
Policy Rating

79
The output from the Chinese policies model
We picked 18 different factors (in the Financial Center model) which are highly
dependent on the policies of the mainland China government. For each of the factors, we divided
it into three situations(positive +, mutual 0, negative -), which denote the different Chinese
policies toward it. And then, we put them into the China government model(absolute hierarchy
model, including four sub-model: benefits, costs, opportunities and risks). After synthesis, we
got the overall score for each policy. Based on the scores, we draw the optimal and most likely
policies package(it is shown below).
Optimal and most likely policies
1 free flow of information 0
2 free flow of people 0
3 educated workforce +
4 convertible currency +
5 deregulated market 0
6 assistance from government +
7 inflation +
8 independent legal system 0
9 political restrcitions 0
10 instability of local society +
11 availability of business professionals +
12 public insecurity +
13 corruption +
14 tax +
15 protectionist barrier 0
16 investment +
17 political credit +
18 access to potential market +

80
The output from the second Financial Center model
Based on the optimal and most likely policies package we got, we made another set of
judgments for the Financial Center model. This is, with the assumptions we have made, an
estimation of the location of the financial center in the Asian-Pacific region. The results are
listed below:
Benefits Opportunities
Economic Political Social Economic Political Social
Hong Kong 0.3814 0.4435 0.4238 Hong Kong 0.4096 0.3813 0.4511
Singapore 0.2992 0.2187 0.2306 Singapore 0.2874 0.2935 0.2227
Tokyo 0.3194 0.3378 0.3456 Tokyo 0.303 0.3252 0.3261

Costs Risks
Economic Political Social Economic Political Social
Hong Kong 0.2966 0.2814 0.3045 Hong Kong 0.4278 0.4278 0.4387
Singapore 0.2561 0.3161 0.1657 Singapore 0.4387 0.4387 0.2365
Tokyo 0.4475 0.4025 0.5298 Tokyo 0.1335 0.1335 0.3248

The overall result is as below


Alternatives Rank (B*O)/(C*R)
Hong Kong 1 1.1822
Singapore 2 1.1093
Tokyo 3 0.5949
We can see that Hong Kong can still maintain the financial center status after 1997, but
the gap between Hong Kong and other cities is much smaller. Especially, Singapore becomes
very competitive.

81
Original Economic Benefits Sub-Model Supermatrix
(Truncated to save space)

Economic Benefits

Local: Sing Toky Hong assi free conv mode good dere
Singapore 0 0 0 0.3196 0.1692 0.1396 0.1692 0.3333 0.2081
Tokyo 0 0 0 0.122 0.4434 0.5278 0.4434 0.3333 0.1311
Hong Kong 0 0 0 0.5584 0.3874 0.3325 0.3874 0.3333 0.6608
assistance from government 0.0538 0.0459 0.0501 0 0 0 0 0
free flow of people 0.044 0.0526 0.0369 0 0 0 0 0
convertible currency 0.0379 0.0796 0.0625 0 0 0 0 0
modern infrastructure 0.0843 0.189 0.0925 0 0 0 0 0
good auditing systems 0.105 0.0801 0.0619 0 0 0 0 0
deregulated market 0.0367 0.0296 0.1166 0 0 0 0 0
geographic advantages 0.1713 0.1599 0.1593 0 0 0 0 0
free flow of information 0.0168 0.0837 0.0594 0 0 0 0 0
free flow of capital 0.1389 0.0917 0.0928 0 0 0 0 0
educated workforce 0.0602 0.0996 0.0537 0 0 0 0 0
internationalized language 0.0961 0.0283 0.0555 0 0 0 0 0
investment from outside 0.1551 0.06 0.1588 0 0 0 0 0

82
Weighted Economic Benefits Sub-Model Supermatrix
(Truncated to save space)

Economic Benefits

Weighted: Sing Toky Hong assi free conv mode good dere
Singapore 0 0 0 0.3196 0.1692 0.1396 0.1692 0.3333 0.2081
Tokyo 0 0 0 0.122 0.4434 0.5279 0.4434 0.3333 0.1311
Hong Kong 0 0 0 0.5584 0.3874 0.3325 0.3874 0.3333 0.6608
assistance from government 0.0538 0.0459 0.0501 0 0 0 0 0
free flow of people 0.044 0.0526 0.0369 0 0 0 0 0
convertible currency 0.0379 0.0796 0.0625 0 0 0 0 0
modern infrastructure 0.0843 0.189 0.0925 0 0 0 0 0
good auditing systems 0.105 0.0801 0.0619 0 0 0 0 0
deregulated market 0.0367 0.0296 0.1166 0 0 0 0 0
geographic advantages 0.1713 0.1599 0.1593 0 0 0 0 0
free flow of information 0.0168 0.0837 0.0594 0 0 0 0 0
free flow of capital 0.1389 0.0917 0.0928 0 0 0 0 0
educated workforce 0.0602 0.0996 0.0537 0 0 0 0 0
internationalized language 0.0961 0.0283 0.0555 0 0 0 0 0
investment from outside 0.1551 0.06 0.1588 0 0 0 0 0

83
Limiting Economic Benefits Sub-Model Supermatrix
(Truncated to save space)

Economic Benefits

Synthesized: Global Sing Toky Hong assi free conv mode good dere
Singapore 0.2836 0.2836 0.2836 0.2836 0.2836 0.2836 0.2836 0.2836 0.2836
Tokyo 0.3033 0.3033 0.3033 0.3033 0.3033 0.3033 0.3033 0.3033 0.3033
Hong Kong 0.4131 0.4131 0.4131 0.4131 0.4131 0.4131 0.4131 0.4131 0.4131
assistance from government 0.0499 0.0499 0.0499 0.0499 0.0499 0.0499 0.0499 0.0499 0.0499
free flow of people 0.0437 0.0437 0.0437 0.0437 0.0437 0.0437 0.0437 0.0437 0.0437
convertible currency 0.0607 0.0607 0.0607 0.0607 0.0607 0.0607 0.0607 0.0607 0.0607
modern infrastructure 0.1194 0.1194 0.1194 0.1194 0.1194 0.1194 0.1194 0.1194 0.1194
good auditing systems 0.0796 0.0796 0.0796 0.0796 0.0796 0.0796 0.0796 0.0796 0.0796
deregulated market 0.0676 0.0676 0.0676 0.0676 0.0676 0.0676 0.0676 0.0676 0.0676
geographic advantages 0.1629 0.1629 0.1629 0.1629 0.1629 0.1629 0.1629 0.1629 0.1629
free flow of information 0.0547 0.0547 0.0547 0.0547 0.0547 0.0547 0.0547 0.0547 0.0547
free flow of capital 0.1055 0.1055 0.1055 0.1055 0.1055 0.1055 0.1055 0.1055 0.1055
educated workforce 0.0695 0.0695 0.0695 0.0695 0.0695 0.0695 0.0695 0.0695 0.0695
internationalized language 0.0588 0.0588 0.0588 0.0588 0.0588 0.0588 0.0588 0.0588 0.0588
investment from outside 0.1278 0.1278 0.1278 0.1278 0.1278 0.1278 0.1278 0.1278 0.1278

84
Normalized by Cluster - Results from Limiting
Economic Benefits Sub-Model Supermatrix
Economic Benefits

Synthesized Local:
Singapore 0.2836
Tokyo 0.3033
Hong Kong 0.4131
assistance from government 0.0499
free flow of people 0.0437
convertible currency 0.0607
modern infrastructure 0.1194
good auditing systems 0.0796
deregulated market 0.0675
geographic advantages 0.1629
free flow of information 0.0547
free flow of capital 0.1055
educated workforce 0.0695
internationalized language 0.0588
investment from outside 0.1278

85
The Result
• The first result from the Financial Center model:

•If the Chinese government is able to maintain the current status of Hong Kong, Hong Kong
would still be the Financial Center is the Asia-Pacific region in 2000.

• The first result from the Mainland China Policy model:

•For interests of the mainland Chinese government, no negative policy should be adopted towards
Hong Kong after 1997. A careful and sensitive approach towards the future Hong Kong policy is
suggested by this result, which is also reinforced by the next result.

• The second result from the Financial Center model:

•Although Hong Kong may still be the best choice for a Financial Center, Singapore will become
a strong competitor for the Center in 2000.

86
Conclusions
1) Based on the first output of our Financial Center model, we can see that if all conditions remain the
same, in other words, if China adopts all the positive policies toward Hong Kong, in other words if the
Chinese government is able to maintain or even improve the current status of Hong Kong, it is quite
sure that Hong Kong will remain one of the important financial centers in the Asia-Pacific region.

2) Among the influencing factors of the financial center status, many of them are dependent directly on
the government’s policies. Therefore, Hong Kong’s future as a financial center is highly dependent on
the political attitude of the Chinese government.

3) Based on the result of our mainland China policy model, we found, among the 18 factors, the
Chinese government should adopt positive policies on 12 of them, and mixed policies on 6 of them. In
other words, for the interests of China itself (not Hong Kong), China should avoid implementing
negative policies, as defined in this study towards Hong Kong as a financial center.

4) Based on the second output of the Financial Center model, Hong Kong will maintain its financial
status after 1997. But at the same time, Singapore will become very competitive. Therefore, our
conclusion is that if Chinese government adopts rational policies toward Hong Kong as estimated in
this study, Hong Kong will remain the number one financial center of the Asian-Pacific region. But at
the same time, the position of Hong Kong as a financial center will be weakened. If any negative
policies are implemented, Singapore will become the number one financial center of this Asia-Pacific
region followed by Hong Kong.

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Feedback Measurement as the Limiting Power of the Supermatrix
The eigenvectors of the paired comparison matrices are each part of a column of the supermatrix. The supermatrix may not be column stochastic. Its
column blocks would be weighted by the priorities of the clusters to render the matrix stochastic. The supermatrix must now be raised to powers to
capture all the interactions and feedback among its elements. What is desired is its limiting power
limW k
k 

The power of a matrix is function of that matrix. Entire functions (series expansion converges for all values) of a matrix can be represented by the
formula: II(jI-W)
n
  ji
k
Wk =
i=1
i II(j-i)
ji
if the eigenvalues are distinct, or if they are not then by:
n
II (- i)
m i=1
1 d mi-1
Wk =  (mi-1)! d mi-1
ki (I-W)-1 n
i=1 II (- i)  = i
i=mi+1
One is the largest eigenvalue of a stochastic matrix. This follows from
n
 max  max a ij
i j=1
and the sum on the right is equal to the one for a column stochastic matrix. It is obvious that the moduli of the remaining eigenvalues of a stochastic
matrix are less than or equal to one.

One is a simple eigenvalue if the matrix is positive. It can be a multiple eigenvalue or there may be other eigenvalues whose moduli are equal to one if
there is a sufficient number of zeros in the matrix so that it is reducible. When the supermatrix has some zero entries, it may be that some power of it is
positive and hence the matrix remains positive for still larger powers and is called primitive.

One is a simple eigenvalue of a primitive matrix. One may be a simple eigenvalue whether the matrix is primitive or not or a multiple eigenvalue yet
there may not be other eigenvalues whose moduli is equal to one. The powers take on a certain form in the limit for each of these three cases. On the
other hand if there are other such roots whose module is one, the powers of the supermatrix would cycle with a period of cyclicity and the limit is
given by the same expression in all three cases namely when the supermatrix is imprimitive or when one is a simple or a multiple eigenvalue.

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Irreducible Stochastic (  = 1 is a simple root)

W =

No other roots with modulus equal to one Other roots with modulus equal to one
(primitive) (imprimitive with cyclicity c).
Case A Case A
Primitive if trace is positive.
Raise W to powers. 1
All columns the same and any column can also be ( I  W c )( I  W ) 1 (W c ) 
c c2
obtained as the solution of the eigenvalue
problem Ww = w.

89
Reducible Stochastic

W =

No other roots with modulus equal to one Other roots with modulus equal to one (cyclic
with cyclicity c).
=1 Case B Case B
Simple
( I W ) 1(1)  Adjo int( I  W ) normalized 1
( I  W c )( I  W ) 1 (W c ) 
(1) (1) c c2

=1 Case C Case C


multiple n1
n1! ( n1  k ) ( )
n1  ( 1) k (I  W )  k 1 | 1 1
( n1  k )  ( ) ( I  W c )( I  W ) 1 (W c ) 
( n1 )
k 0

c c2

The desired outcome for Case C can often be obtained by introducing loops at all sinks and raising the
matrix to limiting powers.

90
Computationally, the foregoing classification may be simplified along the following lines. Define max =
1. We have:
Proper Improper
| i | < 1 i > 1 | i |  1 (for several i)
A primitive stochastic matrix is proper Roots of unity of cyclicity c.
1 = 1 simple root (1) (2)
Fully Regular
1
The index k=1 in the diagonal primitive block ( I  W c )( I  W ) 1 (W c ) 
c
matrices of the normal form

( I  W ) 1  (1) Adjo int( I  W )



(1) (1)

Normalize the columns of the adjoint to get W.


When W is primitive one can simply raise W to
very large powers on a personal computer.

(3) (4)

1 = 1 multiple root If and only if matrices A1,…, Ak in upper part of 1


of multiplicity n1 diagonal of normal form are primitive
( I  W c )( I  W ) 1 (W c ) 
c
n1
n1! ( n1  k ) ( )
n1  (1) k (I  W )  k 1 | 1
k 0 (n1  k )! ( n1 ) ( )

A simple practical rule for obtaining a limiting matrix for a given n by n nonnegative and stochastic
supermatrix W is first to test it for irreducibility with the condition (I+W)n-1 > 0. If it is irreducible, then
max = 1 is simple and one of the two formulas applies. It is then tested for cyclicity and the answer is
obtained using the above.

When alternatives do not feed back into the criteria, it is best not to include them in the supermatrix. The
reason is that if the supermatrix cycles, then the average value would first have to be calculated. The
average weights of the criteria are then used to weight the alternatives in a separate hierarchy.

91
ANP PROJECTS
1996 United States Presidential Election
A Day at the Races: Predicting a Harness Race at the Meadows: An Application of the ANP
A Prediction of Opportunities for Job Growth by U.S. Region
Alternative Fuels for Automobiles
An ANP Approach for Commodity Markets Demand/Supply Ratio Model
Analysis of the Market for 32-Bit Operating Systems
Bridge Management Decision
Choosing the Best Location for Permanent Storage of High-Level Nuclear Waste
Commodity Markets
Convocation Center
Corporate Market Value in the Computer Industry
Corporate Restructuring at Chrysler
Corporate Strategies for Competitors
Crime and Punishment
Disney America: Should Disney Build a Theme Park?
Given $10 Million, What Would be the Best Allocation to Each of the Proposed Programs that
Contribute to Decreasing Gang Activity?
Health Insurance Systems
How to Implement Flex Time
Justify the Existence of the Economic Black Market
Lake Levels and Flow Releases
Management Consulting Model
Market Share Predictions for Aqueous Intra-Nasal Steroids
Medical Center: Strategic Planning with the ANP
Mergers and Acquisitions
Mode of Transportation to School
Modeling a Reservoir Operations for Managing of Ecological Interests
Multi-Objective Decision Making Analysis with Engineering and Business Applications

92
ANP REFERENCES cont’d
NBA Playoffs for 1991
Net Dollar Value for IBM, Apple, Intel and Microsoft
Network Analysis of Illegal Drug Marketing in the United States
Planning Strategies for Incubator Space using the ANP
Predicting the Outcome of Legislative Debate over Superfund Reauthorization
Predicting the Winner of the 1995-1996 NHL Stanley Cup
Predicting the Winner of the 1996 Chase Championship with the ANP
Prediction of 1997 Australian Tennis Open
Prediction of the 1997 Wimbledon Tennis Championships
Prediction of the CPU Market
Prioritizing Flow Alternatives for Social Objectives
Ranking Countries in Telecommunications as a Subset of Locating a Business Problem
Stadium Placement and Optimal Funding
Strategic Staffing – Extra Care Providers
Strategies for Improvement at the Joseph M. Katz Graduate School of Business
Teenage Pregnancy
Telecommunications Network Design and Performance
The Decision to Market Nimbex (new drug) vs. Continuing to Market Tracruim (old drug)
The Emerging Information Technologies of the Future: The “Prize” of Firms and Industries
The Future of East Central Europe
The Future of Major League Baseball in Pittsburgh: Strategic Planning with the ANP
The Future of the University of Pittsburgh’s Medical Center
The Middle East
The Optimal MBA Program Structure
The Teenage Smoking Problem
Transportation to Work
Understanding the Tiananmen Massacre in China
What will be the worth? (Predicting Average Starting Salaries for MBA Graduates)
Where to Invest in Capital Markets

93