IME634: Management

Decision Analysis
Raghu Nandan Sengupta
Industrial & Management Department
Indian Institute of Technology Kanpur

TOPSIS RNSengupta,IME Dept.,IIT Kanpur,INDIA 1

 Technique for Order Preference by
Similarity to Ideal Solution (TOPSIS)
Technique for Order Preference by Similarity to
Ideal Solution (TOPSIS) method was developed
for the INTEGRated Human Exploration Mission
Simulation FaciliTY (INTEGRITY) project in the
Johnson Space Centre to assess the priority of a
set of human spaceflight mission simulators

TOPSIS RNSengupta,IME Dept.,IIT Kanpur,INDIA 2

 TOPSIS (contd…)
One assumes utility function is monotonic, in the
sense the more/less you get more/less you want
The basic premise based on which TOPSIS works
is the fact that selected alternatives should have
the shortest distance from the positive-ideal
solution, and the farthest distance from the
negative-ideal solution
TOPSIS RNSengupta,IME Dept.,IIT Kanpur,INDIA 3
 TOPSIS (contd…)
 Choose positive ideal solution (PIS) of the original ranking
problem
 Choose negative ideal solution (NIS) of the original ranking
problem
 Find distances from each decisions/alternatives, , to PIS,
which is given as
 Find distances from each decisions/alternatives, , to NIS
which is given as

TOPSIS RNSengupta,IME Dept.,IIT Kanpur,INDIA 4

 TOPSIS (contd…)
 Euclidean distance measure is used and we ensure our
main motivation is to minimize the dispersion
 Calculate
 The basic premise being Euclidean distance portrays the
concept of utility function, which is quadratic

TOPSIS RNSengupta,IME Dept.,IIT Kanpur,INDIA 5

 TOPSIS (contd…)

Minimizing ensures minimizing

dispersion, i.e., minimization of
One ranks the ratios, , to get the
best alternative

TOPSIS RNSengupta,IME Dept.,IIT Kanpur,INDIA 6

 Algorithm for TOPSIS
Assume decisions/alternatives as ,
Assume attributes/decision criteria/goals are ,
We state the pseudo-codes for the working
principle of TOPSIS

TOPSIS RNSengupta,IME Dept.,IIT Kanpur,INDIA 7

 Algorithm for TOPSIS (contd…)
1: DEFINE: (matrix consisting of priority scores assigned to decisions/alternatives),,based on attributes/decision criteria/goals,; (weight for the attributes/decision
criteria/goals) such that ; (benefit matrix); (cost matrix);; (negative ideal solution); (positive ideal solution);;; (relative closeness); (separation measure). Here and
2: INPUT: (matrix consisting of priority scores assigned to decisions/alternatives),,based on attributes/decision criteria/goals,; (weight for the attributes/decision
criteria/goals) such that ; (benefit matrix); (cost matrix). Here and
3: START if:
4: START if:
5: CALCULATE: ; where and
6: END if
7: END if
8: CALCULATE: ;;;;;;;
9: REPORT: ;;;
10: END

TOPSIS RNSengupta,IME Dept.,IIT Kanpur,INDIA 8

 TOPSIS (contd…): Distance measure
 The Euclidean distance between vector/points and is
 The norm or Manhattan distance between vector/points and
is. The name relates to the distance a taxi has to drive in a
rectangular street grid
 Mahalanobis distance between random vector/points and is ,
where is the covariance matrix

TOPSIS RNSengupta,IME Dept.,IIT Kanpur,INDIA 9

 TOPSIS (contd…): Distance measure
 The Hamming distance between vector/points and is the
number of positions at which the corresponding values are
different
 The norm between vector/points and is
 The norm between vector/points and is

TOPSIS RNSengupta,IME Dept.,IIT Kanpur,INDIA 10

 TOPSIS: Step # 01 (Construct the
normalized decision matrix)
 Assume the decision matrix,
 Convert the entries in X into scaled normalized values, , which has no dimension
 Thus we get

TOPSIS RNSengupta,IME Dept.,IIT Kanpur,INDIA 11

 TOPSIS: Step # 01 (Construct the
normalized decision matrix) (contd..)
 Assume,
 Scale the values using normalization concept, i.e.,(you can use any other concept of utility also)

TOPSIS RNSengupta,IME Dept.,IIT Kanpur,INDIA 12

 TOPSIS: Step # 01 (Construct the
normalized decision matrix) (contd..)

 Check each column adds up to 1 as it should be

TOPSIS RNSengupta,IME Dept.,IIT Kanpur,INDIA 13

 TOPSIS: Step # 02 (Construct the
weighted normalized decision matrix)
 If the decision maker decides on the set of weights, depending on
his/her preference, then the weight, , such that
 Consider,
 Calculate

TOPSIS RNSengupta,IME Dept.,IIT Kanpur,INDIA 14

 TOPSIS: Step # 02 (Construct the
weighted normalized decision matrix)
 Thus
(contd..)
 Hence

TOPSIS RNSengupta,IME Dept.,IIT Kanpur,INDIA 15

TOPSIS: Step # 03 (Determine the most positive-ideal,
most negative-ideal solutions)
Calculate which is most positive ideal solution
Where

TOPSIS RNSengupta,IME Dept.,IIT Kanpur,INDIA 16

TOPSIS: Step # 03 (Determine the most positive-ideal,
most negative-ideal solutions)
Calculate which is most negative ideal solution
Where

TOPSIS RNSengupta,IME Dept.,IIT Kanpur,INDIA 17

 TOPSIS: Step # 04 (Calculate the distance based on
most positive-ideal, most negative-ideal solutions)

Calculate based on most positive ideal

solution
Where ,

TOPSIS RNSengupta,IME Dept.,IIT Kanpur,INDIA 18

 TOPSIS: Step # 04 (Calculate the distance based on
most positive-ideal, most negative-ideal solutions)

Calculate based on most negative ideal

solution
Where ,

TOPSIS RNSengupta,IME Dept.,IIT Kanpur,INDIA 19

 TOPSIS: Step # 05 (Calculate the relative proximity
based on ideal solution)

Calculate ,

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 TOPSIS: Example
 Consider the problem related to buying a house/apartment among four (04) choices, where the
decision to buy the house/apartment is based on eleven (11) different parameters/criterion which are
 City
 Price
 Loan availability/conditions
 Location
 Number of rooms
 Safety
 Proximity to markets
 Proximity to schools
 Proximity to hospitals
 Facilities available
 Resale condition

TOPSIS RNSengupta,IME Dept.,IIT Kanpur,INDIA 21

 TOPSIS: Example (contd..)

 Use the normalization formulae as ,

TOPSIS RNSengupta,IME Dept.,IIT Kanpur,INDIA 22

 TOPSIS: Example (contd..)
 For example
 0.5964
 0.6471

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 TOPSIS: Example (contd..)
• Consider , where

TOPSIS RNSengupta,IME Dept.,IIT Kanpur,INDIA 24

 TOPSIS: Example (contd..)
 For example
 0.0215

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 TOPSIS: Example (contd..)
 Calculate
V+=(0.0669, 0.0632, 0.0656, 0.0586, 0.0736, 0.0446,
0.0528, 0.0758, 0.0658, 0.0385, 0.0417), where

TOPSIS RNSengupta,IME Dept.,IIT Kanpur,INDIA 26

 TOPSIS: Example (contd..)
 Calculate
V-=(0.0535, 0.0368 , 0.0493, 0.0331, 0.0416, 0.0000,
0.0000, 0.0427, 0.0358, 0.0265, 0.0117), where

TOPSIS RNSengupta,IME Dept.,IIT Kanpur,INDIA 27

 TOPSIS: Example (contd..)
 Calculate the distance of each project to most positive
ideal solution using , thus

TOPSIS RNSengupta,IME Dept.,IIT Kanpur,INDIA 28

 TOPSIS: Example (contd..)
 Calculate the distance of each project to most negative
ideal solution using , thus

TOPSIS RNSengupta,IME Dept.,IIT Kanpur,INDIA 29

 TOPSIS: Example (contd..)
 Calculate the relative proximity index of each alternative (which
is buying the house/apartment) to the ideal solution according to
formula , thus

TOPSIS RNSengupta,IME Dept.,IIT Kanpur,INDIA 30

 TOPSIS: Example (contd..)
Thus the ranking is
Hence Alternative # 04 is the best (position
# 01) choice followed by Alternative # 01
(position # 02), then by Alternative # 03
(position # 03) and finally followed by
Alternative # 02 (position # 04)
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