Lesson

TheAnalyticHierarchyProcess(AHP)
InthisLesson TheAnalyticHierarchyProcess. Thebasicprinciples. SometheoryandmathematicsbehindAHP.

Duration:100minutes

TheAnalyticHierarchyProcess
The Analytic Hierarchy Process (AHP) is due to Saaty (1980) and quite often is referred to, as the Saatymethod.Itispopularandwidelyused,indecisionmakingandinawiderangeofapplications. Saaty, in his book, describes case applications ranging from the choice of a school for his son, through to the planning of transportation systems for the Sudan. There is much more to the AHP thanwehavespaceforbutwewilltrytocoverthemosteasilyusedaspectsofit. TheAHPdealswithproblemsofthefollowingtype.Afirmwishestobuyonenewpieceofequipment ofacertaintypeandhasfouraspectsinmindwhichwillgovernitspurchasingchoice:expense(E), operability (O), reliability (R), and flexibility (F). Competing manufacturers of that equipment have offeredthreeoptions,X,YandZ.Thefirmsengineershavelookedattheseoptionsanddecidedthat Xischeapandeasytooperatebutisnotveryreliableandcouldnoteasilybeadaptedtootheruses. Y is somewhat more expensive, is reasonably easy to operate, and is very reliable but not very adaptable.Finally,Zisveryexpensive,noteasytooperate,isalittlelessreliablethanYbutisclaimed bythemanufacturertohaveawiderangeofalternativeuses.EachofX,YandZwillsatisfythefirms requirements to differing extents so which, overall, best meets this firms needs? This is clearly an important and common class of problem and the AHP has numerous applications but also some limitationswhichwillbediscussedattheendofthishelpsection.

Thebasicprinciples
ThemathematicsoftheAHPandthe calculationtechniquesareexplainedinthesection "TheAHP calculations" but its essence is to construct a matrix expressing the relative values of a set of attributes.Forexample,whatistherelativeimportancetothemanagementofthisfirmofthecost of equipment as opposed to its ease of operation? They are asked to choose whether cost is very muchmoreimportant,rathermoreimportant,andasimportant,andsoondowntoverymuchless

TheAnalyticHierarchyProcess(AHP) important,thanoperability.Eachofthesejudgmentsisassignedanumberonascale.Onecommon scale(adaptedfromSaaty)istheoneshowninTable1. Intensity of importance 1 3 5

Definition Equalimportance Somewhatmoreimportant Muchmoreimportant

Explanation Twofactorscontributeequallytothe objective. Experienceandjudgmentslightlyfavor oneovertheother. Experienceandjudgmentstronglyfavor oneovertheother. Experienceandjudgmentverystrongly favoroneovertheother.Itsimportance isdemonstratedinpractice. Theevidencefavoringoneoverthe otherisofthehighestpossiblevalidity. Whencompromiseisneeded.
Table1

Verymuchmoreimportant

9 2,4,6,8

Absolutelymoreimportant Intermediatevalues

A basic, but very reasonable, assumption is that if attribute A is absolutely more important than attributeBandisratedat9,thenBmustbeabsolutelylessimportantthanAandisvaluedat1/9. Thesepairwisecomparisonsarecarriedoutforallfactorstobeconsidered,usuallynotmorethan7, and the matrix is completed. The matrix is of a very particular form which neatly supports the calculationswhichthenensue. Thenextstepisthecalculationofalistoftherelativeweights,importance,orvalue,ofthefactors, such as cost and operability, which are relevant to the problem in question (technically, this list is called an eigenvector). If, perhaps, cost is very much more important than operability, then, on a simpleinterpretation,thecheapequipmentiscalledforthough,asweshallsee,mattersarenotso straightforward.ThefinalstageistocalculateaConsistencyRatio(CR)tomeasurehowconsistent thejudgmentshavebeenrelativetolargesamplesofpurelyrandomjudgments.IftheCRismuchin excess of 0.1 the judgments are untrustworthy because they are too close for comfort to randomnessandtheexerciseisvaluelessormustberepeated.Itiseasytomakeaminimumnumber of judgments after which the rest can be calculated to enforce a perhaps unrealistically perfect consistency.

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TheAnalyticHierarchyProcess(AHP) TheAHPissometimessadlymisusedandtheanalysisstopswiththecalculationoftheeigenvector fromthepairwisecomparisonsofrelativeimportance(sometimeswithoutevencomputingtheCR!) buttheAHPstruesubtletyliesinthefactthatitis,asitsnamesays,aHierarchyprocess.Thefirst eigenvectorhasgiventherelativeimportanceattachedtorequirements,suchascostandreliability, but different machines contribute to differing extents to the satisfaction of those requirements. Thus,subsequentmatricescanbedevelopedtoshowhowX,YandZrespectivelysatisfytheneedsof thefirm.(Thematricesfromthislowerlevelinthehierarchywilleachhavetheirowneigenvectors andCRs.)Thefinalstepistousestandardmatrixcalculationstoproduceanoverallvectorgivingthe answerweseek,namelytherelativemeritsofX,YandZvisvisthefirmsrequirements.

Sometheory
Consider n elements to be compared, C1 Cn and denote the relative weight (or priority or significance) of Ci with respect to Cj by aij and form a square matrix A=(aij) of order n with the constraintsthataij=1/aji,forij,andaii=1,alli.Suchamatrixissaidtobeareciprocalmatrix.The weightsareconsistentiftheyaretransitive,thatisaik=aijajkforalli,j,andk.Suchamatrixmight existiftheaijarecalculatedfromexactlymeasureddata.Thenfindavectorofordernsuchthat A=.Forsuchamatrix,issaidtobeaneigenvector(ofordern)andisaneigenvalue.Fora consistent matrix, = n. For matrices involving human judgment, the condition aik = aijajk does not holdashumanjudgmentsareinconsistenttoagreaterorlesserdegree.Insuchacasethevector satisfies the equation A= max and max n. The difference, if any, between max and n is an indicationoftheinconsistencyofthejudgments.Ifmax=nthenthejudgementshaveturnedoutto be consistent. Finally, a Consistency Index can be calculated from (maxn)/(n1). That needs to be assessedagainstjudgmentsmadecompletelyatrandomandSaatyhascalculatedlargesamplesof random matrices of increasing order and the Consistency Indices of those matrices. A true Consistency Ratio is calculated by dividing the Consistency Index for the set of judgments by the Indexforthecorrespondingrandommatrix.Saatysuggeststhatifthatratioexceeds0.1thesetof judgmentsmaybetooinconsistenttobereliable.Inpractice,CRsofmorethan0.1sometimeshave tobeaccepted.IfCRequals0thenthatmeansthatthejudgmentsareperfectlyconsistent.

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TheAnalyticHierarchyProcess(AHP)

Somemathematics
Thereareseveralmethodsforcalculatingtheeigenvector.Multiplyingtogethertheentriesineach rowofthematrixandthentakingthenthrootofthatproductgivesaverygoodapproximationtothe correct answer. The nth roots are summed and that sum is used to normalize the eigenvector elementstoaddto1.00.InTable2below,the4throotforthefirstrowis0.293andthatisdividedby 5.024togive0.058asthefirstelementintheeigenvector.Thetablebelowgivesaworkedexample intermsoffourattributestobecomparedwhich,forsimplicity,werefertoasA,B,C,andD. nthrootof productsof Eigenvector values 0.293 1.316 2.279 1.136 5.024 0.058 0.262 0.454 0.226 1.000

A B C D Totals

A 1 3 9 5

1/3 1/9 1/5 1 1 1 1 1 1/3 1 3 1

Table2

TheeigenvectoroftherelativeimportanceorvalueofA,B,CandDis(0.058,0.262,0.454,0.226). Thus, C is the most valuable, B and D are behind, but roughly equal and A is very much less significant. ThenextstageistocalculatemaxsoastoleadtotheConsistencyIndexandtheConsistencyRatio. Wefirstmultiplyontheright thematrixofjudgmentsbytheeigenvector,obtaininga newvector. Thecalculationforthefirstrowinthematrixis: 1 0.058+1/3 0.262+1/9 0.454+1/5 0.226=0.240 andtheremainingthreerowsgive1.116,1.916and0.928.Thisvectoroffourelements(0.240,1.116, 1.916,0.928)is,ofcourse,theproductAandtheAHPtheorysaysthatA=maxsowecannow get four estimates of max by the simple expedient of dividing each component of (0.240, 1.116, 1.916, 0.928) by the corresponding eigenvector element. This gives 0.240/0.058 = 4.137 together with4.259,4.22and4.11.Themeanofthesevaluesis4.18andthatisourestimateformax.Ifanyof the estimatesformaxturnsout tobe lessthan n, or4in this case,there hasbeenan errorinthe calculation,whichisausefulsanitycheck. TheConsistencyIndexforamatrixiscalculatedfrom(maxn)/(n1)and,sincen=4forthismatrix,the CIis0.060.ThefinalstepistocalculatetheConsistencyRatioforthissetofjudgmentsusingtheCI InternationalHellenicUniversity ParaskevopoulosKonstantinos 4

TheAnalyticHierarchyProcess(AHP) for the corresponding value from large samples of matrices of purely random judgments using the Table3below,derivedfromSaatysbook,inwhichtheupperrowistheorderoftherandommatrix, andtheloweristhecorrespondingindexofconsistencyforrandomjudgments. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 0.00 0.00 0.58 0.90 1.12 1.24 1.32 1.41 1.45 1.49 1.51 1.48 1.56 1.57 1.59
Table3

For this example, that gives 0.060/0.90=0.0677. Saaty argues that a CR > 0.1 indicates that the judgments are at the limit of consistency though CRs > 0.1 (but not too much more) have to be acceptedsometimes.Inthisinstance,weareonsafeground.ACRashighas,say,0.9wouldmean thatthepairwisejudgmentsarejustaboutrandomandarecompletelyuntrustworthy.

InternationalHellenicUniversity ParaskevopoulosKonstantinos