Dit 1141: Operations Management Department of Decision and Information Technologies College of Commerce and Finance Villanova University

DIT 1141: OPERATIONS MANAGEMENT
DEPARTMENT OF DECISION AND

INFORMATION TECHNOLOGIES
COLLEGE OF COMMERCE AND FINANCE
VILLANOVA UNIVERSITY
INTRODUCTION
INTRODUCTION
Operations management is the process of obtaining

and utilizing resources to produce useful goods
and services so as to meet the goals of the
organization.
INTRODUCTION
Production management is concerned with the

manufacturing of goods:
Examples of goods:
cars
books
chairs
computers
houses
etc.
INTRODUCTION
Operations management is also concerned with the

management of service industries as well as the
manufacturing of goods.
INTRODUCTION
Examples of services:
retailing/food
banking
education
health care
utilities
insurance
government agencies
etc.
OVERVIEW OF OPERATIONS
MANAGEMENT MODEL
Input: resources
raw materials
Output
machines
Transformation
personnel
Process Goods or
capital
Services
land/buildings
utilities
information
etc.
Control
OVERVIEW OF OPERATIONS
MANAGEMENT MODEL
Operations management considers how the input are

transformed into goods or services.
Control is when something is learned about the goods

or services that is used to more effectively transform
future goods or services.
EXAMPLE OF OPERATIONS
MANAGEMENT PROCESS
Automobile factory
Input
MANAGEMENT PROCESS
Automobile factory
Input
steel, plastic
glass, paint
tools
equipment
machines
personnel, buildings
utilities, etc.
MANAGEMENT PROCESS
Automobile factory
Input
steel, plastic
glass, paint
tools Transformation
equipment process
machines
utilities, etc.
MANAGEMENT PROCESS
Automobile factory
Input Output
steel, plastic
glass, paint
equipment process
machines
utilities, etc.
MANAGEMENT PROCESS
Automobile factory
Input Output
steel, plastic Car
glass, paint
equipment process
machines
utilities, etc.
OPERATIONS MANAGEMENT
QUESTIONS
1. How many items will be demanded next month?
2. How many items should be produced next month?
3. How many workers are needed to satisfy the

proposed production level?
OPERATIONS MANAGEMENT
QUESTIONS
4. If a plant is built, how should the activities be
scheduled so that the project is completed on time,
within budget, and with acceptable quality?
5. How is the quality of our output measured and

how is it improved?
6. If tires are needed, how many should be ordered?

MANAGEMENT PROCESS
Hospital
Input
MANAGEMENT PROCESS
Hospital
Input
patients, doctors
nurses, drugs
beds
building
medical equipment
support staff, computers
utilities, etc.
MANAGEMENT PROCESS
Hospital
Input
patients, doctors
nurses, drugs Transformation
beds Process
building
medical equipment
utilities, etc.
MANAGEMENT PROCESS
Hospital
Input Output
patients, doctors
beds Process
building
medical equipment
utilities, etc.
MANAGEMENT PROCESS
Hospital
Input Output
patients, doctors A treated patient
beds Process
building
medical equipment
utilities, etc.
MANAGEMENT PROCESS
University
Input
MANAGEMENT PROCESS
University
Input
students, professors
secretaries
MANAGEMENT PROCESS
University
Input
secretaries, drugs
MANAGEMENT PROCESS
University
Input
secretaries, drugs
MANAGEMENT PROCESS
University
Input
secretaries, lab equipment
dormitories
staff, computers
buildings
etc.
MANAGEMENT PROCESS
University
Input
dormitories
staff, computers Transformation
buildings process
etc.
MANAGEMENT PROCESS
University
Input Output
dormitories
buildings process
etc.
MANAGEMENT PROCESS
University
Input Output
students, professors A more highly
secretaries, lab equipment educated
dormitories student
buildings process
etc.
DECISION MAKING IN
OPERATIONS:
THE ANALYTIC
HIERARCHY PROCESS
INTRODUCTION
What is the Analytic Hierarchy Process (AHP)?

The AHP, developed by Tom Saaty, is a decision-
making method for prioritizing alternatives when
multi-criteria must be considered.
An approach for structuring a problem as a hierarchy

or set of integrated levels.
INTRODUCTION
AHP problems are structured in at least three levels:
The goal, such as selecting the best car to purchase,
The criteria, such as cost, safety, and appearance,
The alternatives, namely the cars themselves.

INTRODUCTION
The decision-maker:
measures the extent to which each alternative

achieves each criterion, and
determines the relative importance of the criteria in

meeting the goal, and
synthesizes the results to determine the relative

importance of the alternatives in meeting the goal.
APPROACH
How does AHP capture human judgments?
AHP never requires you to make an absolute

judgment or assessment. You would never be
asked to directly estimate the weight of a stone in
kilograms.
AHP does require you to make a relative assessment

between two items at a time. AHP uses a ratio
scale of measurement.
APPROACH
Suppose the weights of two stones are being
assessed. AHP would ask: How much heavier (or
lighter) is stone A compared to stone B?
AHP might tell us that, of the total weight of stones

A and B, stone A has 65% of the total weight,
whereas, stone B has 35% of the total weight.
APPROACH
Individual AHP judgments are called pairwise
comparisons.
These judgments can be based on objective or

subjective information.
For example, smoothness might be a subjective

criterion used to compare two stones. Pairwise
comparisons could be based on touch.
APPROACH
However, suppose stone A is a diamond worth
$1,000.00 and stone B is a ruby worth $300.00.
This objective information could be used as a basis

for a pairwise comparison based on the value of
the stones.
APPROACH
Consistency of judgments can also be measured.
Consistency is important when three or more
items are being compared.
Suppose we judge a basketball to be twice as large as

a soccer ball and a soccer ball to be three times as
large as a softball.
To be perfectly consistent, a basketball must be six

times as large as a softball.
APPROACH
AHP does not require perfect consistency, however,
it does provide a measure of consistency.
We will discuss consistency in more detail later.

AHP APPLICATIONS
AHP has been successfully applied to a variety of
problems.
1. R&D projects and research papers;

2. vendors, transport carriers, and site locations;
3. employee appraisal and salary increases;
4. product formulation and pharmaceutical licensing;
5. capital budgeting and strategic planning;
6. surgical residents, medical treatment, and
diagnostic testing.
AHP APPLICATIONS
The product and service evaluations prepared by
consumer testing services is another potential
application.
Products and services, such as self propelled lawn

mowers are evaluated.
Factors include: bagging, mulching, discharging,

handling, and ease of use.
An overall score for each mower is determined.

AHP APPLICATIONS
Would you make your purchasing decision based
solely on this score?
Probably not! Some of the information will be
helpful.
Some additional questions are:

How important is each criterion?
Would you weigh the criteria the same way?
Are all of the criteria considered important to you?
Are there other criteria that are important to you?
Have you ever thought about these issues?
RANKING SPORTS RECORDS
The AHP has been used to rank outstanding season,
career, and single event records across sports.
Season
1. Babe Ruth, 1920: .847 slugging average
2. Joe DiMaggio, 1944: 56 game hitting streak
3. Wilt Chamberlain, 1961-62: 50.4 points per game
scoring average
Career
1. Johnny Unitas, 1956-70: touchdown passes in 47
consecutive games
2. Babe Ruth, 1914-35: .690 slugging average
3. Walter Payton, 1975-86: 16,193 rushing yardage
Single event
1. Wilt Chamberlain, 1962: 100 points scored
2. Norm Van Brocklin, 1951: 554 passing yards
3. Bob Beamon, 1968: 29' 2.5" long jump
How do we compare records from different sports?
It all depends on the criteria that you select!
Golden and Wasil (1987) used the following criteria:

1. Duration of record - years record has stood, years
expected to stand
2. Incremental improvement - % better than previous
record
3. Other record characteristics - glamour, purity
(single person vs. team)
Did this article end all arguments about sports records?
Absolutely not!
In bars and living rooms across the country, people still

argue about sports.
AHP provides a methodology to structure the debate.
Different criteria and different judgments could produce

different results.
A FINAL POINT ABOUT SPORTS
In reading the sports pages we often see discussion
of how well teams match up across different
positions.
These match-ups are often used to predict a winner.
Match-ups is a pairwise comparison concept!

AHP APPLICATIONS
Our culture is obsessed with quantitative rankings of
all sorts of things.
There are many measurement problems associated

with rankings of products, sports teams,
universities, and the like.
Many of these issues are discussed on a web site at:

http://www.expertchoice.com/annie.person.
APPLES AND ORANGES
The discussion of how to compare records from
different sports recalls a saying from childhood:
APPLES AND ORANGES
You can’t compare apples and oranges. All you

get is mixed fruit!
APPLES AND ORANGES

get is mixed fruit!
After the discussion about sports, do you still believe

this statement?
APPLES AND ORANGES

get is mixed fruit!
After the discussion about sports, do you still believe

this statement?
We hope not!!!
APPLES AND ORANGES
What criteria might you use when comparing apples
and oranges?
There are a vast set of criteria that may change
depending upon time of day or season of year:
taste, texture, smell,

ripeness, juiciness, nutrition,
shape, weight, color, and
cost.
Can you think of others?

APPLES AND ORANGES
The point is that people are often confronted with the
choice between apples and oranges.
Their choice is based on some psychological

assessment of:
relevant criteria,
their importance, and
how well the alternatives achieve the criteria.
CAR PURCHASE EXAMPLE
We now consider a motivating example.
After completing this example, you will have an

understanding of the basics of AHP and its
application through Expert Choice
(www.expertchoice.com).
We want to apply the AHP to help a couple decide

which car they should purchase.
CAR PURCHASE EXAMPLE
The couple is considering three criteria: cost, safety,
and appearance.
They have narrowed their alternatives to three

specific cars: Honda, Mazda, and Volvo.
We demonstrate how to build the AHP hierarchy in

Expert Choice.
EXPERT CHOICE: FILE SETUP
Select the File, New option and enter a file name
such as CARS.EC1. (You must use the EC1 file
extension.)
Choose the Direct option to create the model. Next,

specify the description of the goal, such as, “Select
the best car.”
To enter the criteria, use the Edit, Insert command.
Use the Esc key when finished entering the
criteria.
To add the alternative cars under the cost node,

simply highlight the cost node and again use the
Edit, Insert command. Use the Esc key when
finished.
To include the same alternatives under the other
criteria nodes, first highlight the cost node, then
select Edit, Replicate children of current node, To
Peers, Yes.
Double-click on the goal node to display the

complete hierarchy.
Additional details can be found in the Expert Choice

tutorial provided with the software.
ANALYZING THE HIERARCHY
1. Determine the weights of the alternatives for each
criterion.
2. Determine the priorities or weights of the criteria

in achieving the goal.
3. Determine the overall weight of each alternative in

achieving the goal. This is accomplished by
combining the results of the first two stages and is
called synthesis.
HYPOTHETICAL DATA FOR CAR
PURCHASE EXAMPLE
Car Cost Safety* Appearance

Honda $22,000 28 Sporty
Mazda 28,500 39 Slick
Volvo 33,000 52 Dull
* Safety Rating from a consumer testing service - the

higher the number, the safer the car.
DETERMINING PRIORITIES
The couple begins by making pairwise comparison
judgments between each pair of cars for the cost
criterion.
In our example, three judgments are needed: Honda

to Mazda, Mazda to Volvo, and Honda to Volvo.
STANDARD 1 - 9 MEASUREMENT SCALE
Intensity of Importance Definition Explanation
1 Equal importance Two activities contribute equally
3 Moderate importance Experience and judgment slightly favor one
activity over another
5 Strong importance Experience and judgment strongly favor one
activity over another
7 Very strong An activity is favored very strongly over
another
9 Extreme importance The evidence favoring one activity over
another is of the highest possible order
of affirmation
2, 4, 6, 8 For compromise Sometimes one needs to interpolate a
values compromise between the above judgment
numerically because there is no good
word to describe it
1.1 - 1.9 For tied activities When elements are close and nearly
indistinguishable; moderate is 1.3 and
extreme is 1.9
Reciprocals of above If activity A has For example, if the pairwise comparison of
one of the above A to B is 3.0, then the pairwise comparison
numbers assigned of B to A is 1/3
to it when compared
with activity B,
then B has the
reciprocal value
when compared to A.
COST PAIRWISE COMPARISONS
The pairwise comparisons are represented in the
form of pairwise comparison matrices.
The computation of the weights are also shown.
Consider the pairwise comparison matrix to compare

the cars for the cost criterion.
Remember that the costs of the three cars are:

$22000, $28500, and $33000, respectively.
If we compare the Honda to the Honda, obviously
they are equal.
Therefore, a 1 (equal preferred) is placed in the first

row, first column entry of the matrix.
A. ORIGINAL COST PAIRWISE COMPARISON MATRIX
Honda Mazda Volvo
22K Honda 1
28.5K Mazda
33K Volvo
The other entries along the main diagonal of the
matrix are also 1.
This simply means that everything is equally

preferred to itself.
Honda Mazda Volvo
22K Honda 1
28.5K Mazda 1
33K Volvo 1
Suppose we believe the Honda ($22000) is equally

to moderately preferred to the Mazda ($28500).
Place a 2 in the row 1, column 2 entry.
Some might argue that the Honda should be 1.295

times better than the Mazda (28,500/22,000).
Do you agree?
It depends!
For some, $28,500 is significantly greater than

$22,000, implying a judgments greater than 1.295.
Others with a lot of money may perceive virtually no

difference between the two costs, implying a
judgment somewhere between 1 and 1.295.
Honda Mazda Volvo
22K Honda 1 2
28.5K Mazda 1
33K Volvo 1
If the Honda is 2 times better than the Mazda, this
implies that the Mazda ($28500) is one half as
good as the Honda ($22000).
The reciprocal judgment, (1/2), should be placed in

the row 2, column 1 entry of the matrix.
Honda Mazda Volvo
22K Honda 1 2
28.5K Mazda 1/2 1
33K Volvo 1
Suppose that we judge the Mazda ($28500) to be
equally to moderately preferred to the Volvo
($33000).
The following judgments would be entered in the

matrix.
Honda Mazda Volvo
22K Honda 1 2
28.5K Mazda 1/2 1 2
33K Volvo 1/2 1
Assuming perfect consistency of judgments, we
would expect that the Honda ($22000) is 4 times
(that is, moderately to strongly) preferred to the
Volvo ($33000).
We will relax this assumption later.

Honda Mazda Volvo
22K Honda 1 2 4
28.5K Mazda 1/2 1 2
33K Volvo 1/4 1/2 1
The matrix is now complete and the weights for each
car (for the cost criterion) can be computed.
The exact computational procedure is implemented

in Expert Choice. For details see Expert Choice
homepage and download AHPDEMO.EXE.
A simple three step procedure can be used to
approximate the weights for each alternative.
Essentially, this procedure normalizes the ratios of

the judgments between any pair of alternatives.
1. SUM THE ELEMENTS IN EACH COLUMN OF THE ORIGINAL MATRIX.
2. DIVIDE EACH ELEMENT IN THE ORIGINAL MATRIX BY ITS COLUMN SUM.
THIS RESULTS IN THE ADJUSTED MATRIX.
3. COMPUTE THE ROW AVERAGES - THESE ARE THE WEIGHTS.

Honda Mazda Volvo
22K Honda 1 2 4
28.5K Mazda 1/2 1 2
33K Volvo 1/4 1/2 1
------- ------- -------
COLUMN TOTALS

Honda Mazda Volvo
22K Honda 1 2 4
28.5K Mazda 1/2 1 2
33K Volvo 1/4 1/2 1
------- ------- -------
COLUMN TOTALS 7/4 7/2 7

Honda Mazda Volvo
22K Honda 1 2 4
28.5K Mazda 1/2 1 2
33K Volvo 1/4 1/2 1
------- ------- -------

Honda Mazda Volvo
22K Honda 1 2 4
28.5K Mazda 1/2 1 2
33K Volvo 1/4 1/2 1
------- ------- -------
B. ADJUSTED COST PAIRWISE COMPARISON MATRIX

Honda Mazda Volvo
Honda 4/7* 4/7 4/7
Mazda 2/7 2/7 2/7
Volvo 1/7 1/7 1/7
* This entry is obtained by dividing the Honda entry in the original matrix (1) by
the Honda column total (7/4).
Notice that no variation is seen across the rows because

the judgments are perfectly consistent.
For the third column, judgments totaling 7 were awarded.

The Honda received 4 of 7 (57.1%), the Mazda 2 of 7
(28.6%), and the Volvo 1 of 7 (14.3%) of the weight.
Similar comparisons can be made for the other two

columns.

Honda Mazda Volvo
22K Honda 1 2 4
28.5K Mazda 1/2 1 2
33K Volvo 1/4 1/2 1
------- ------- -------

Honda Mazda Volvo
Honda 4/7* 4/7 4/7
Mazda 2/7 2/7 2/7
Volvo 1/7 1/7 1/7

Honda Mazda Volvo
22K Honda 1 2 4
28.5K Mazda 1/2 1 2
33K Volvo 1/4 1/2 1
------- ------- -------
B. ADJUSTED COST PAIRWISE COMPARISON MATRIX WEIGHTS

Honda Mazda Volvo (ROW AVG.)
Honda 4/7* 4/7 4/7 0.571
Mazda 2/7 2/7 2/7 0.286
Volvo 1/7 1/7 1/7 0.143
---------
TOTAL 1.000
EXPERT CHOICE: Entering Judgments
Expert Choice offers a variety of modes for entering
the judgments.
Highlight the cost node, select Assessment.
There are three options: Pairwise, Data, and Ratings.
Ratings will be discussed later.

The Data option allows the user to enter data items
for each alternative, for example, costs, miles per
gallon, and number of defects.
Expert Choice takes the ratio of these data items and

converts them into pairwise comparisons.
What assumption are you making if you use the Data

option?
The data items have a linear preference scale, that
is, a $20,000 car is twice as good as a $40,000 car.
To enter our cost judgments choose Pairwise.
When comparing alternatives select Preference for

Type; for criteria select Importance.
Modes options are: Verbal, Matrix (numerical),

Questionnaire, and Graphic.
Assessment, Pairwise, Matrix is demonstrated.
Enter judgments, Calculate and Record.

INCONSISTENCY OF JUDGMENTS
Since our pairwise comparisons were perfectly
consistent, Expert Choice reports
INCONSISTENCY RATIO = 0.0.
If this ratio is greater than 0.1 some revision of

judgments is required.
Select Inconsistency (within Assessment, Pairwise)

to identify the most inconsistent judgments.
Inconsistency of judgments may result from:
problems of estimation;
errors between the comparisons;
or, the comparisons may be naturally inconsistent.
One example of natural inconsistency is in a sporting
contest.
If team A is twice as likely to beat team B, and if

team B is three times as likely to beat team C, this
does not necessarily imply that team A is six times
as likely to beat team C.
This inconsistency may result because of the way

that the teams “match-up” overall.
The point is not to stop inconsistency from
occurring.
Make sure that the level of inconsistency remains

within some reasonable limit.
How does a judgment change affect the car weights?
Suppose the Mazda to Volvo changes from 2 to 3.
This obviously changes the comparison for Volvo to

Mazda from (1/2) to (1/3).
The judgments are now somewhat inconsistent.

Honda Mazda Volvo
22K Honda 1 2 4
28.5K Mazda 1/2 1 3
33K Volvo 1/4 1/3 1

Honda Mazda Volvo
22K Honda 1 2 4
28.5K Mazda 1/2 1 3
33K Volvo 1/4 1/3 1
------- ------- -------

Honda Mazda Volvo
22K Honda 1 2 4
28.5K Mazda 1/2 1 3
33K Volvo 1/4 1/3 1
------- ------- -------

Honda Mazda Volvo
Honda 4/7* 6/10 4/8
Mazda 2/7 3/10 3/8
Volvo 1/7 1/10 1/8

Honda Mazda Volvo
22K Honda 1 2 4
28.5K Mazda 1/2 1 3
33K Volvo 1/4 1/3 1
------- ------- -------
B. ADJUSTED COST PAIRWISE COMPARISON MATRIX WEIGHTS

Honda Mazda Volvo (ROW AVG.)
Honda 4/7* 6/10 4/8 0.557
Mazda 2/7 3/10 3/8 0.320
Volvo 1/7 1/10 1/8 0.123
--------
TOTAL 1.000
The new weights are: 0.557, 0.320, and 0.123. The
inconsistency resulted in some change in the
original weights of 0.571, 0.286, and 0.143.
As expected, the weight for the Mazda increased

while the weight for the Volvo decreased.
The weights now vary across each row. Essentially,

inconsistency measures the degree of variation
across the rows.
EXPERT CHOICE: Revising Judgments
Highlight cost node, select Assessment, Pairwise.
Enter a 3 in the Mazda to Volvo cell then Calculate.
The weights of 0.558, 0.320, and 0.122 are slightly

different from the three-step procedure weights.
This is not due to rounding -- Expert Choice gives the

exact results.
The INCONSISTENCY RATIO is now 0.02.

The weights can also be used to measure the
effectiveness of the alternatives.
For example, based on all pairwise comparisons, we

determined that the Honda is 1.74 (0.558/0.320)
times better than the Mazda.
Why is this ratio 1.74 and not the pairwise

comparison of 2?
Inconsistency in the judgments!
REMAINING COMPUTATIONS
Next, the cars must be pairwise compared for the
safety criterion and then for the appearance
criterion.
These judgments are shown on the next page.
Since the Mazda to Honda safety comparison is 2,

highlight the Honda to Mazda cell, click Invert,
and enter 2.
This judgment now appears in red.

SAFETY & APPEARANCE JUDGMENTS
Safety Pairwise Comparison Matrix
Honda Mazda Volvo
28 Honda 1 1/2 1/5
39 Mazda 2 1 1/4
52 Volvo 5 4 1
Appearance Pairwise Comparison Matrix
Honda Mazda Volvo
SportyHonda 1 5 9
Slick Mazda 1/5 1 2
Dull Volvo 1/9 1/2 1
Next, the criteria must be pairwise compared.
These judgments are shown on the next page.
There are no data to support these judgments since

they are purely a reflection of your preferences.
CRITERIA JUDGMENTS
Original Criteria Pairwise Comparison Matrix

Cost Safety Appearance
Cost 1 1/2 3
Safety 2 1 5
Appearance 1/3 1/5 1
The last stage computes the final weights for each car.
Multiply the criteria weight by the car weight for each

criterion and then sum over all criteria.
This is nothing more than a weighted average.
The computational results are shown next.

FINAL CAR WEIGHTS
CRITERIA WEIGHTS
COST SAFETY APPEARANCE
0.309 0.582 0.109

CARS FINAL WEIGHTS
Honda 0.558 0.117 0.761

Mazda 0.320 0.200 0.158
Volvo 0.122 0.683 0.082
FINAL CAR WEIGHTS
CRITERIA WEIGHTS
0.309 0.582 0.109

CARS FINAL WEIGHTS
Honda 0.558 0.117 0.761 0.324

Mazda 0.320 0.200 0.158
Volvo 0.122 0.683 0.082
Honda: (0.558)(0.309) + (0.117)(0.582) + (0.761)(0.109) = 0.324

0.173 0.068 0.083
FINAL CAR WEIGHTS
CRITERIA WEIGHTS
0.309 0.582 0.109

CARS FINAL WEIGHTS
Honda 0.558 0.117 0.761 0.324

Mazda 0.320 0.200 0.158 0.232
Volvo 0.122 0.683 0.082
Honda: (0.558)(0.309) + (0.117)(0.582) + (0.761)(0.109) = 0.324

0.173 0.068 0.083
Mazda: (0.320)(0.309) + (0.200)(0.582) + (0.158)(0.109) = 0.232

0.099 0.116 0.017
FINAL CAR WEIGHTS
CRITERIA WEIGHTS
0.309 0.582 0.109
CARS FINAL WEIGHTS
Honda 0.558 0.117 0.761 0.324
Mazda 0.320 0.200 0.158 0.232
Volvo 0.122 0.683 0.082 0.444
Honda: (0.558)(0.309) + (0.117)(0.582) + (0.761)(0.109) = 0.324

0.173 0.068 0.083
Mazda: (0.320)(0.309) + (0.200)(0.582) + (0.158)(0.109) = 0.232

0.099 0.116 0.017
Volvo: (0.122)(0.309) + (0.683)(0.582) + (0.082)(0.109) = 0.444

0.038 0.397 0.009
LOCAL VS GLOBAL WEIGHTS
For cost, the local weights for the cars are 0.558, 0.320,
and 0.122 and sum to 1.000.
The global weights are computed by multiplying the cost

criterion weight by the local car weights.
The global weights are 0.173, 0.099, and 0.038 and sum to
the cost criterion weight of 0.309.
EXPERT CHOICE: Synthesis
To compute the final weights select Synthesis (from
GOAL).
Choose Distributive Mode and Display Summary.
Details provides the global weights.
The output can also be exported to a spreadsheet

using the Utilities, Export Model(s) to Spreadsheet
commands.
EXPERT CHOICE: Printing
The Print icon can be used to select certain options.
The recommended print options are: Entire Tree,

Tree Views, Judgments/Data, and Synthesis.
INTERPRETING THE RESULTS
The final weights provide a measure of the relative
performance of each alternative.
It is important to properly interpret the meaning of

these numbers.
The Volvo is ranked first, the Honda second, and

Mazda third.
The Volvo is preferred 1.37 (0.444/0.324) times

more than the Honda.
INTERPRETING THE RESULTS
Should we buy the Volvo?
The output is a decision-making aid and cannot
replace the decision-maker.
The results can be used to support discussion and

possibly the judgments will be revised.
This iterative process is quite normal.
AHP can help to facilitate communication and

generate consensus between different groups.
SENSITIVITY ANALYSIS
Sensitivity analysis is an important aspect of any
decision-making process.
Sensitivity analysis determines whether small changes

in judgments affects the final weights and rankings
of the alternatives.
If so, the decision-maker may want to review the

sensitive judgments.
EXPERT CHOICE: Sensitivity Analysis
In Expert Choice sensitivity analysis from the GOAL
shows how the weights and the rankings of the
alternatives change if some or all of the criteria
weights change.
There are five graphical sensitivity analysis modes

available: Performance, Dynamic, Gradient, Two-
Dimensional, and Difference.
The first three show how a change in a criterion

weight affects the final weights of the alternatives.
The last two show how the alternatives perform with
respect to any two criteria.
Performance: places all sensitivity information on a

single chart with horizontal line graphs for the
alternatives linked to vertical bars for the criteria.
Dynamic: two sets of dynamically linked horizontal

bar graphs: one for criteria and one for
alternatives.
Gradient: a line graph that shows how the weights of
the alternatives vary according to the weight
assigned to a specific criterion. (Use the X-Axis to
change the selected criterion.)
Two-Dimensional: shows how well the alternatives

perform with respect to any two criteria.
Difference: a graph that shows the differences

between any two alternatives for any criterion.
An important use of sensitivity analysis is to
determine how much a given criterion weight
must change before there is a change in the
rankings of the two highest alternatives.
This type of breakeven analysis can be easily done in

Expert Choice.
Choose Dynamic from the Sensitivity-Graphs option.
Drag the cost criterion bar 30.9% to approximately

45.9%, and see that the Volvo and Honda have the
same highest final weight.
The final rankings are relatively insensitive to a

change in the cost criterion weight because the
cost weight had to be increased by almost 50% to
get a change in the rankings.
NEW PRODUCT INTRODUCTION
CHOCK-FUL-O-CHIPS developed the following
hierarchy and data that can be used to help decide
which chocolate chip recipe they should use.
Select the best recipe
Taste Cost Fat Content
Recipe 1 Recipe 1 Recipe 1

RECIPE DATA
Taste Fat Content
Recipe Cost* Rating** (Grams)*
1 $0.166 54% 8.0
2 0.099 24% 7.0
3 0.265 20% 3.5
4 0.224 43% 6.0
* Per one ounce cookie
** Percentage of people who rated a cookie either an 8 or
9 on a 9-point scale, where 9 means extremely liked, 8
means liked very much, and down to one which means
extremely disliked.
TASTE PAIRWISE COMPARISON
MATRIX
54% 24% 20% 43%
Recipe 1 Recipe 2 Recipe 3 Recipe 4
Recipe 1 1
Recipe 2 1
Recipe 3 1
Recipe 4 1
COST PAIRWISE COMPARISON
MATRIX
0.166 0.099 0.265 0.224
Recipe 1 1
Recipe 2 1
Recipe 3 1
Recipe 4 1
FAT CONTENT PAIRWISE
COMPARISON MATRIX
8.0 7.0 3.5 6.0
Recipe 1 1
Recipe 2 1
Recipe 3 1
Recipe 4 1
CRITERIA PAIRWISE
COMPARISON MATRIX
Taste 1
Cost 1
Fat Content 1
FINAL WEIGHTS FROM EXPERT
CHOICE
Criteria Weights
Final
Weights
Recipe 1
Recipe 2
Recipe 3
Recipe 4
SUMMARY
In this chapter:
we provided an overview of operations management;

and
offered the AHP as a decision-making process with

application in operations management.
SUMMARY
AHP benefits include:
natural way to elicit judgments;
measure degree of inconsistency;
easy to use;
allows broad participation; and
fully supported by Expert Choice.

Dit 1141: Operations Management Department of Decision and Information Technologies College of Commerce and Finance Villanova University

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DIT 1141: OPERATIONS MANAGEMENT

DEPARTMENT OF DECISION AND

Operations management is the process of obtaining

Production management is concerned with the

Operations management is also concerned with the

Operations management considers how the input are

Control is when something is learned about the goods

2. How many items should be produced next month?

3. How many workers are needed to satisfy the

5. How is the quality of our output measured and

6. If tires are needed, how many should be ordered?

What is the Analytic Hierarchy Process (AHP)?

An approach for structuring a problem as a hierarchy

AHP problems are structured in at least three levels:

The goal, such as selecting the best car to purchase,

The criteria, such as cost, safety, and appearance,

The alternatives, namely the cars themselves.

measures the extent to which each alternative

determines the relative importance of the criteria in

synthesizes the results to determine the relative

AHP never requires you to make an absolute

AHP does require you to make a relative assessment

AHP might tell us that, of the total weight of stones

These judgments can be based on objective or

For example, smoothness might be a subjective

This objective information could be used as a basis

Suppose we judge a basketball to be twice as large as

To be perfectly consistent, a basketball must be six

We will discuss consistency in more detail later.

1. R&D projects and research papers;

Products and services, such as self propelled lawn

Factors include: bagging, mulching, discharging,

An overall score for each mower is determined.

Some additional questions are:

Golden and Wasil (1987) used the following criteria:

In bars and living rooms across the country, people still

AHP provides a methodology to structure the debate.

Different criteria and different judgments could produce

These match-ups are often used to predict a winner.

Match-ups is a pairwise comparison concept!

There are many measurement problems associated

Many of these issues are discussed on a web site at:

You can’t compare apples and oranges. All you

You can’t compare apples and oranges. All you

After the discussion about sports, do you still believe

You can’t compare apples and oranges. All you

After the discussion about sports, do you still believe

taste, texture, smell,

Can you think of others?

Their choice is based on some psychological

After completing this example, you will have an

We want to apply the AHP to help a couple decide

They have narrowed their alternatives to three

We demonstrate how to build the AHP hierarchy in

Choose the Direct option to create the model. Next,

To add the alternative cars under the cost node,

Double-click on the goal node to display the

Additional details can be found in the Expert Choice

2. Determine the priorities or weights of the criteria

3. Determine the overall weight of each alternative in

Car Cost Safety* Appearance

* Safety Rating from a consumer testing service - the

In our example, three judgments are needed: Honda