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Multi Criteria Decision Making. Goal Programming MAUT, Multi Attribute Utility Theory, Keeney & Raiffa 1976 Europe: Electra (Roy et al.) USA : AHP (Saaty). Examples of many criteria. Location Planning Equipment Selection Supplier Selection Evaluation of applicants Ranking Projects

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multi criteria decision making
Multi Criteria Decision Making
  • Goal Programming
  • MAUT, Multi Attribute Utility Theory, Keeney & Raiffa 1976
  • Europe: Electra (Roy et al.)
  • USA : AHP (Saaty)
examples of many criteria
Examples of many criteria
  • Location Planning
  • Equipment Selection
  • Supplier Selection
  • Evaluation of applicants
  • Ranking Projects
  • Environmental Evaluation
environmental evaluation criteria
Environmental Evaluation Criteria
  • History
  • Animals
  • Vegetation
  • Water System
  • Landscape
  • Recreation
analytic hierarchy process
Analytic Hierarchy Process
  • Thomas Saaty 1975
  • Expert Choice Software
  • See www.expertchoice.com
  • >1500 published references on AHP
  • Case Studies:
    • Location
    • Selecting suppliers
    • Job candidates evaluation
ahp pros cons
AHP, pros & cons
  • Pros:
    • Doable
    • Pairwise Comparison
    • Consistency Index
  • Cons:
    • The AHP Scale (1-9)
    • Many alternatives
ahp methodology
AHP methodology
  • 1. Criteria are compared by importance => weights
  • 2. Alternatives are scored against each criteria
  • 3. Final index for each alternative is calculated from weights and scores
the ahp scale
The AHP Scale
  • 1 Equal importance
  • 3 Moderately more important
  • 5 Strongly more important
  • 7 Very strongly more important
  • 9 Extremely more important
pairwise comparison
Pairwise Comparison
  • Wi = Weight of criteria i

W1/W1 W1/W2 W1/Wn

  • W2/W1 W2/W2 W2/Wn
  • A =
      • Wn/W1 Wn/W2 Wn/Wn
consistency check
Consistency Check
  • 1. Compute A*w’
  • 2. M = (1/n)*i(A*w’)i/w’i
  • 3. CI = (M – n)/(n – 1)
  • 4. CI/RI > 0,1 => Inconsistency
  • where n = 2 3 4 5 6 7 8
  • => RI = 0 0,58 0,90 1,12 1,24 1,32 1,41
pareto efficient frontier
Pareto Efficient Frontier

NPV of Profit

Alt 2

Alt 5

Alt 3

Alt 4

Alt 1

Environment Impact Index

ahp example locating an aluminium smelter in iceland
AHP Example: Locating an Aluminium Smelter in Iceland
  • Criteria:
    • Labour, community and service
    • Harbour, roads and infrastructure
    • Power, closeness to a power plant
  • Alternatives:
    • Keilisnes
    • Eyjafjörður
    • Reyðarfjörður
  • See Excel-document
master plan for hydro and geothermal energy
Master Plan for Hydro and Geothermal Energy
  • Based on the best available scientific information
  • Open for democratic public involvement
  • Large number of proposed power projects were evaluated
  • Ministry of Industry, in co-operation with the Ministry of the Environment
steering committee supported by about 50 experts
Steering Committee supported by about 50 experts
  • Working Group I will evaluate what impact proposed power projects will have on Nature, landscape, geological formations, vegetative cover, flora and fauna, as well as cultural heritage and ancient monuments.
  • Working Group II will evaluate the impact on outdoor life, agriculture, revegitation, fishing in rivers and lakes, and hunting.
  • Working Group III will evaluate the impact proposed power projects can have on economic activity, employment and regional development.
  • Working Group IV will identify potential power projects, both hydro and geothermal, and carry out technical as well as economic evaluation of the projects.
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