TOPSIS

Technique for Order of Preference by Similarity to Ideal Solution

Motivation - 1
• In our complex world system, we are forced to cope
with more problems than we have the resources to
handle.
• What we need is not a more complicated way of
thinking but a framework that will enable us to think of
complex problems in a simple way.

 The AHP provides such a framework that enables us to

make effective decisions on complex issues by
simplifying and expediting our natural decision-making
processes.
Motivation - 2
• Humans are not often logical creatures.
• Most of the time we base our judgments on hazy
impressions of reality and then use logic to defend our
conclusions.

 The AHP organizes feelings, intuition, and logic in a

structured approach to decision making.
Motivation - 3
• There are two fundamental approaches to solving
problems: the deductive approach and the inductive
(or systems) approach.
• Basically, the deductive approach focuses on the parts
whereas the systems approach concentrates on the
workings of the whole.

 The AHP combines these two approaches into one

integrated, logic framework.
• An advantage of the AHP is that it is designed to handle situations in
which the subjective judgments of individuals constitute an important
part of the decision process.
• Basically the AHP is a method of (1) breaking down a complex,
unstructured situation into its component parts; (2) arranging these
parts, or variables into a hierarchic order; (3) assigning numerical
values to subjective judgments on the relative importance of each
variable; and (4) synthesizing the judgments to determine which
variables have the highest priority and should be acted upon to
influence the outcome of the situation.
Advantages of the AHP
The AHP enables people to refine
their definition of a problem and to
improve their judgment and
understanding Process
throughRepetition
repetition
The AHP does not insist on
consensus but synthesizes a
Judgment and Consensus
representative outcome from diverse
judgments
The AHP takes into consideration the
Tradeoffs
relative priorities of factors in a
system and enables people to select
the best alternative based on their
goals
Synthesis
The AHP leads to an overall estimate
of the desirability of each alternative
The AHP tracks the logical
consistency of judgments used
in determining priorities
The AHP provides a single, easily
understood, flexible model for a
wide range of unstructured problems
Unity
The AHP integrates deductive and
Complexity
systems approaches in solving
complex problems
The AHP can deal with the
Interdependence
interdependence of elements in a
system and does not insist on linear
AHP thinking
The AHP reflects the natural
tendency of the mind to sort
Hierarchic Structuring
elements of a system into different
levels and to group like elements in
each level
Measurement
The AHP provides a scale for
measuring intangibles and a method
Consistency for establishing priorities
Interesting Cases of AHP
• Xerox Corporaton uses AHP for R&D decisions on portfolio management,
technology implementation, and engineering design selection.
• British Columbia Ferries Corporation in Canada uses AHP in the selection
of products, suppliers and consultants.
• NASA used AHP to consider criteria for Safety, Performance, Reliability
and Flexibility in recommending a power source for the first lunar
outpost.
• General Motors use AHP to evaluate design alternatives, perform risk
management, and arrive at the best and most cost effective automobile
designs.
Limitations of AHP

• Subjective Evaluation
• Inconsistencies imposed by 1 to 9 scale
• Decision maker capacity
TOPSIS
• In 1981, Hwang and Yoon proposed Technique for Order of Preference by
Similarity to Ideal Solution (TOPSIS), which is one of the MCDM methods.
• In this method two artificial alternatives are hypothesized:

• Ideal alternative: the one which has the best level for all attributes
considered.
• Negative ideal alternative: the one which has the worst attribute values.

• TOPSIS selects the alternative that is the closest to the ideal solution and
farthest from negative ideal alternative.
 • Choose the linguistic rating values for the
alternative with respect to criteria on the
basis of scale
• Calculate aggregate fuzzy ratings for the
alternatives
• Normalized fuzzy decision matrix
Steps • Construct the weighted normalized matrix
• Determine the fuzzy (PIS) and fuzzy (NIS)
• Calculate the distance of each alternative
from FPIS and FNIS
• Calculate the closeness coefficient (CCi) of
each alternative
Step 1: Choose the linguistic rating values for the
alternative with respect to criteria on the basis of scale

Linguistic variables Corresponding TFN

Very poor (VP) (1,1,3)

Poor (P) (1,3,5)

Medium (M) (3,5,7)

Good (G) (5,7,9)

Very Good (VG) (7,9,11)

Step 2: Calculate aggregate fuzzy ratings for
the alternatives
•  If the fuzzy ratings of all experts are described as TFN = (ak,bk,ck),
k=1,2,3…K then the aggregated fuzzy rating is given where
• a= mink {ak , b =, c= maxk {Ck
Step 3: Normalized fuzzy decision matrix
Step 4: Construct the weighted normalized
matrix.
• The weighted normalized matrix for criteria is computed by
multiplying the weights (Wj) of evaluation criteria with the
normalized fuzzy decision matrix:
Step 5: Determine the fuzzy (PIS) and fuzzy
(NIS)
•  The FPIS and FNIS of the alternatives is computed as follows:
• A* = () where = (, and maxi {ij
• A- = () where = (, and maxi {ij}
Step 6: Calculate the distance of each
alternative from FPIS and FNIS
•  =, ), i= 1,2,…..m
• =, ), i= 1,2,…..m
Step 7: Calculate the closeness coefficient
(CCi) of each alternative
•  =

• Based on the value, suppliers are prioritized in descending order

Thank You!