Maritime Engineering Design

JEE483

Analytic Hierarchy Process

Dr Walid Amin

Dr Walid Amin 1 20/05/2014

Why AHP?
…introduction

• Building systematic decision making mechanisms

• Communicates priorities and builds consensus around decisions
• Avoid conflicts in decision making conferences and meetings
• Transparency of evaluations through the adoption of clear pre-defined
assessment criteria.
• Provide rational supported justification for decisions that are not
dependent on guessing or personal preferences.
• Reduce the time consumed in a conventional decision making spiral for
multi objective decisions.
• Documents and justifies your decisions
• Enables you to move forward quickly and confidently

Dr Walid Amin 2 20/05/2014

AHP
…introduction

• The method was developed by

Dr Thomas L Saaty in early
1970’s
• The process has been used to
assist numerous corporate and
government decision makers
– Choosing a telecommunication
system
– Formulating a drug policy
– Choosing a product marketing
strategy
– Ship design by decision making
• The problem is decomposed into
a hierarchy of criteria (sub
criteria) and alternatives

Dr Walid Amin 3 20/05/2014

AHP
Example
• You are about to decide on the
selection of a new car. Use the
AHP to formulate your decision
Dr Walid Amin
…How does the process work
Solution
• You will need first to establish the
following three steps:
• State a clear objective
– Select a new car
• Define the criteria
– Style, reliability, fuel economy
• Pick the most suitable alternative
for your needs:
– Civic coupe, saturn coupe, ford
escort, renault clio
4 20/05/2014
AHP
…How does the process work

What about cost?

We’ll answer this later

Dr Walid Amin 5 20/05/2014

AHP
…The car example

• The selection model is then arranged in a hierarchical order:

Dr Walid Amin 6 20/05/2014

Selecting a car
…setting up

• The selection model is then

arranged in a hierarchical order
• The information is then
synthesized to determine relative
rankings of alternatives
• Both qualitative and quantitative
criteria can be compared using
informed judgements to derive
weights and priorities for each
criterion

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Selecting a car
…relative importance of criteria

• Assuming the reliability is the most important followed by

style then fuel economy, so the following judgements can be
made:
– Reliability is 2 times as important as style
– Style is 3 times as important as fuel economy
– Reliability is 4 times as important as fuel economy

• Note that it’s OK NOT to be 100% consistent

Dr Walid Amin 8 20/05/2014

Selecting a car
…pairwise comparison matrix: PCM

• It’s a method to determine the relative importance of one criterion over

another with respect to a predefined comparison scale
• Eg: 1: equal, 2: moderate, 3: strong, 7: very strong, 9: extreme

• Now, we are ready to build the comparison matrix

Dr Walid Amin 9 20/05/2014

Selecting a car
…extracting priorities from criteria PCM

• Eigenvalues can be computed for the PCM, from which an eigenvector is

extracted that sets the priorities of each criterion
• This is mathematically proven by Dr Saaty, where it was concluded that
the best approach for this problem is to calculate the eigenvalue/vector of
the PCM
• A scalar  is an eigenvalue and a nonzero vector x is the corresponding
eigenvector of a square matrix A if Ax = x.
• To obtain the priorities, one should compute the principal (maximum)
eigenvalue and the corresponding eigenvector of the pairwise
comparisons matrix.
• It can be shown that the (normalised) principal eigenvector is the
priorities vector. The principal eigenvalue is used to estimate the degree of
consistency of the data.

Dr Walid Amin 10 20/05/2014

Selecting a car
…extracting priorities from criteria PCM

• to calculate the eigenvectors we’ll use an iterative approximate procedure: sum

each row in a vector, sum the vector elements, then normalise the vector

• 2

• =

• Then, our first iteration results in the approximate eigenvector:

Dr Walid Amin 11 20/05/2014

Selecting a car
…extracting priorities from criteria PCM

• To get our second iteration, re-square the original PCM matrix, i.e. (A2)2

× =

• The second iteration eigenvector is obtained the same way

Dr Walid Amin 12 20/05/2014

Selecting a car
…extracting priorities from criteria PCM

• The iteration stops when the difference between two consecutive

iterations is less than a prescribed marginal error

• The eigenvector values can be interpreted as criteria ranking as follows

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Selecting a car
…Revisiting our hierarchy model

• Now the criteria weight/priorities are illustrated on the hierarchy tree

model

Dr Walid Amin 14 20/05/2014

Selecting a car
…extracting priorities from Alternatives PCM

• Similarly we can rank alternatives with respect to each criteria in the same
way:

• The method is flexible and can combine both qualitative and quantitative
information. For the fuel criterion, priorities can be calculated directly as
follows

Dr Walid Amin 15 20/05/2014

Selecting a car
…Complete model priorities

• The model with all weights is now ready for processing to calculate the
priority of alternatives with respect to all criteria:

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 Activity

• Which car will you select?

A) Civic
B) Saturn
C) Escort
D) Clio

Dr Walid Amin 17 20/05/2014

Selecting a car
…Complete model priorities

• With simple matrix multiplication, the alternatives ranking is the product

of the overall ranking matrix * the criteria ranking vector

• Clio has the highest ranking WRT the selection criteria

Dr Walid Amin 18 20/05/2014
Selecting a car
…The cost factor

• Although costs could be included in the analysis, in many complex

decisions, costs should be set aside until the evaluation of alternatives.
• As a rule of thumb, if you are a contract engineer in your organisation
evaluating alternatives technically, DO NOT assume that procurement
department would be able to understand or consider your technical
ranking in their commercial evaluation.
• Usually commercial evaluations will ask a simple and straight forward
question: is the alternative technically acceptable or not. They do not care
about ranking of acceptable alternatives
• You will always need to consider operational costs in your model, this is
something that procurement is not paying attention at while operations
and maintenance team will be struggling with

Dr Walid Amin 19 20/05/2014

Selecting a car
…Handling the cost
• Several strategies maybe used to include costing:
– Graphing benefits (technical ranking) vs costs, CHOOSE the alternative with lowest cost
and highest benefit.

– Derive benefit to cost ratios

– Linear programming
– Investigate costing through a hierarchy model separate from the technical, then combine
the results.
– Include the costing and technical aspects with PRE_AGREED priorities between costing and
technical criteria (eg: technical 60%, costing 40% or 50-50 %)

Dr Walid Amin 20 20/05/2014

Selecting a car
…Handling the cost
• Using benefit cost ratio:

• Civic is a winner

Dr Walid Amin 21 20/05/2014

AHP
…Applications

• Strategic planning
• Resource allocation/selection
• Evaluation of offers
• Evaluation of contractors/subcontractors
• Evaluation of shipyards
• Evaluation of Business /public policy
• Evaluation of software
• And many many applications……..

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 Questions

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