Multi criteria decision making
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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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