Analytical Hierarchy Process (AHP)
Definition of AHP
"Analytical Hierarchy Process (AHP) is an approach to decision making that involves structuring multiple choice criteria into a hierarchy, assessing the relative importance of these criteria, comparing alternatives for each criterion, and determining an overall ranking of the alternatives", as defined by DSS Resources.
The concept of AHP was developed, amongst other theories, by Thomas Saaty, an American mathematician working at the University of Pittsburgh.
What is analytical hierarchy process (AHP)?
By organizing and assessing alternatives against a hierarchy of multifaceted objectives, AHP provides a proven, effective means to deal with complex decision making. Indeed, AHP allows a better, easier, and more efficient identification of selection criteria, their weighting and analysis. Thus, AHP reduces drastically the decision cycle.
Benefits of the analytical hierarchy process (AHP)
AHP helps capture both subjective and objective evaluation measures, providing a useful mechanism for checking the consistency of the evaluation measures and alternatives suggested by the team thus reducing bias in decision making.
AHP allows organizations to minimize common pitfalls of decision making process, such as lack of focus, planning, participation or ownership, which ultimately are costly distractions that can prevent teams from making the right choice.
Prescription of the analytical hierarchy process (AHP)
AHP is very useful when the decision-making process is complex, for instance, by being unstructured. Indeed, when the decision cycle involves taking into account a variety of multiple criteria which rating is based on a multiple-value choice, AHP splits the overall problem to solve into as many evaluations of lesser importance, while keeping at the same time their part in the global decision.
Steps of the analytical hierarchy process (AHP)
Decompose the unstructured problem into systematic hierarchies, from top (the more general) to bottom (the more specific). Navigating through the hierarchy from top to bottom, the AHP structure comprises goals (systematic branches and nodes), criteria (evaluation parameters) and alternative ratings (measuring the adequation of the solution for the criterion). Each branch is then further divided into an appropriate level of detail. The more criteria, the less important each individual criterion may become. This drawback is compensated by assigning a weight to each criterion.
Assign a relative weight to each criterion, based on its importance within the node to which it belongs. The sum of all the criteria beneath a given parent criterion in each tier of the model must equal 100% or 1. A global priority is computed to show the relative importance of a criterion within the overall model.
Score alternatives and compare each one to others. Using AHP, a relative score for each alternative is assigned to each leaf within the hierarchy, then to the branch the leaf belongs to, and so on up to the top of the hierarchy, where an overall score is computed.
Compare alternatives and select the one that best fits the requirements.
Web resources about the analytical hierarchy process
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