1

General introduction

1.1 Introduction
People face making decisions both in their professional and private lives. A manager
in a company, for example, may need to evaluate suppliers and develop partnerships
with the best ones. A household may need to choose an energy supplier for their
family home. Students cannot ignore university rankings. Often candidates for a job
vacancy are ‘ranked’ based on their experience, performance during the interview,
etc.
As well as ranking and choice problems, there are also classification problems
that have existed since classical times. In the fourth century bc, the ancient Greek
philosopher Epicurus arranged human desires into two classes: vain desires (e.g.
the desire for immortality) and natural desires (e.g. the desire for pleasure). These
Copyright © 2013. John Wiley & Sons, Incorporated. All rights reserved.

classifications were supposed to help in finding inner peace. Nowadays, classification

problems occur naturally in daily life. A doctor, for instance, diagnoses a patient
on the basis of their symptoms and assigns them to a pathology class to be able
to prescribe the appropriate treatment. In enterprise, projects are often sorted into
priority-based categories. Not long ago, a study showed that over 20 million Brazilians
have moved from the lower social categories (D and E) to category C, the first
tier of the middle class, and are now active consumers due to an increase in legal
employment (Observador 2008). Hurricanes or cyclones are sorted into one of the
five Saffir–Simpson categories based on their wind speed, superficial pressure and
tide height.
All of these examples show that delicate decision problems arise frequently.
Decision problems such as ranking, choice and sorting problems are often complex as
they usually involve several criteria. People no longer consider only one criterion (e.g.
price) when making a decision. To build long-term relationships, make sustainable
and environmentally friendly decisions, companies consider multiple criteria in their
decision process.

Multi-Criteria Decision Analysis: Methods and Software, First Edition. Alessio Ishizaka and Philippe Nemery.
© 2013 John Wiley & Sons, Ltd. Published 2013 by John Wiley & Sons, Ltd.

Ishizaka, A., & Nemery, P. (2013). Multi-criteria decision analysis : Methods and software. John Wiley & Sons, Incorporated.
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 2 MULTI-CRITERIA DECISION ANALYSIS

Table 1.1 Category of decision problems.

Decision Time perspective Novelty Degree of structure Automation

Strategic long term new low low

Tactical medium term adaptive semi-structured middle
Operational short term every day well defined high

Most of the time, there is no one, perfect option available to suit all the criteria:
an ‘ideal’ option does not usually exist, and therefore a compromise must be found.
To address this problem the decision maker can make use of naı̈ve approaches such
as a simple weighted sum. The weighted sum, described in Section 4.3.1, is a special
case of a more complex method and can only be applied with the right precautions
(correct normalization phase, independent criteria, etc.) to enable sensible outputs.
In reality, this approach is unrefined as it assumes linearity of preferences which may
not reflect the decision maker’s preferences. For example, it cannot be assumed that a
wage of £4000 is twice as good as one of £2000. Some people would see their utility
of preference improved by a factor of 5 with a wage of £4000. This cannot always be
modelled with a weighted sum.
Multi-criteria decision analysis (MCDA) methods have been developed to support
the decision maker in their unique and personal decision process. MCDA methods
provide stepping-stones and techniques for finding a compromise solution. They have
the distinction of placing the decision maker at the centre of the process. They are not
automatable methods that lead to the same solution for every decision maker, but they
incorporate subjective information. Subjective information, also known as preference
Copyright © 2013. John Wiley & Sons, Incorporated. All rights reserved.

information, is provided by the decision maker, which leads to the compromise

solution.
MCDA is a discipline that encompasses mathematics, management, informatics,
psychology, social science and economics. Its application is even wider as it can be
used to solve any problem where a significant decision needs to be made. These
decisions can be either tactical or strategic, depending on the time perspective of the
consequences (Table 1.1).
A large number of methods have been developed to solve multi-criteria problems.
This development is ongoing (Wallenius et al. 2008) and the number of academic
MCDA-related publications is steadily increasing. This expansion is among others
due to both the efficiency of researchers and the development of specific methods for
the different types of problem encountered in MCDA. The software available, includ-
ing spreadsheets containing method computations, ad hoc implementations, off-the-
shelf, web or smartphone applications, has made MCDA methods more accessible
and contributed to the growth in use of MCDA methods amongst researchers and the
user community.
The aim of this book is to make MCDA methods even more intelligible to
novice users such as students, or practitioners, but also to confirmed researchers.
This book is ideal for people taking the first step into MCDA or specific MCDA
methods. The cases studies and exercises effectively combine the mathematical and
Ishizaka, A., & Nemery, P. (2013). Multi-criteria decision analysis : Methods and software. John Wiley & Sons, Incorporated.
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 GENERAL INTRODUCTION 3

practical approach. For each method described in this book, an intuitive explanation
and interpretation of the method is set out, followed by a detailed description of
the software best suited to the method. Free or free trial version software has been
intentionally chosen, as it allows the reader to better understand the main ideas
behind the methods by practising with the exercises in this book. Furthermore, the
user has access to a Microsoft Excel spreadsheet containing an ‘implementation’ of
each method. Software files and answers to the exercises can be downloaded from the
companion website, indicated by the icon in the book. The selected software and
exercises allow the user to observe the impact of changes to the data on the results.
The use of software enables the decision maker or analyst to communicate and justify
decisions in a systematic way.
Each chapter contains a section (‘In the black box’) where scientific references
and further reading are indicated for those interested in a more in-depth description
or detailed understanding of the methods. Each chapter concludes with extensions of
the methods to other decision problems, such as group decision or sorting problems.
This first chapter describes the different type of decision problems to be addressed
in this book. This is followed by the introduction of the MCDA method best suited
to solving these problems along with the corresponding software implementation.
As several methods can solve similar problems, a section devoted to choosing an
appropriate method has also been included. The chapter concludes with an outline of
the book.

1.2 Decision problems

On any one day people face a plethora of different decisions. However, Roy (1981)
Copyright © 2013. John Wiley & Sons, Incorporated. All rights reserved.

has identified four main types of decision:

1. The choice problem. The goal is to select the single best option or reduce the
group of options to a subset of equivalent or incomparable ‘good’ options. For
example, a manager selecting the right person for a particular project.
2. The sorting problem. Options are sorted into ordered and predefined groups,
called categories. The aim is to then regroup the options with similar behaviours
or characteristics for descriptive, organizational or predictive reasons. For
instance, employees can be evaluated for classification into different cate-
gories such as ‘outperforming employees’, ‘average-performing employees’
and ‘weak-performing emplyees’. Based on these classifications, necessary
measures can be taken. Sorting methods are useful for repetitive or automatic
use. They can also be used as an initial screening to reduce the number of
options to be considered in a subsequent step.
3. The ranking problem. Options are ordered from best to worst by means of
scores or pairwise comparisons, etc. The order can be partial if incomparable
options are considered, or complete. A typical example is the ranking of
universities according to several criteria, such as teaching quality, research
expertise and career opportunities.
Ishizaka, A., & Nemery, P. (2013). Multi-criteria decision analysis : Methods and software. John Wiley & Sons, Incorporated.
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 4 MULTI-CRITERIA DECISION ANALYSIS

4. The description problem. The goal is to describe options and their conse-
quences. This is usually done in the first step to understand the characteristics
of the decision problem.
Additional problem types have also been proposed in the MCDA community:
5. Elimination problem. Bana e Costa (1996) proposed the elimination problem,
a particular branch of the sorting problem.
6. Design problem. The goal is to identify or create a new action, which will
meet the goals and aspirations of the decision maker (Keeney 1992)
To this list of problems the ‘elicitation problem’ can be added as it aims to elicit
the preference parameters (or subjective information) for a specific MCDA method.
Moreover, when the problem involves several decision makers, an appropriate group
decision method needs to be used.
Many other decision problems exist, often combining several of the problems
listed above. However, this book concentrates on the first four decision problems and
presents extensions of some of the methods that allow, for example, group, elicitation
and description problems also to be addressed.

1.3 MCDA methods

To solve the problems defined in the previous section, ad hoc methods have been
developed. In this book, the most popular MCDA methods are described along with
their variants. Table 1.2 presents these methods and the decision problems they solve.
There are many more decision methods than those presented in Table 1.2, but this
book confines itself to the most popular methods that have a supporting software
Copyright © 2013. John Wiley & Sons, Incorporated. All rights reserved.

package.

Table 1.2 MCDA problems and methods.

Choice Ranking Sorting Description

Chapter problems problems problems problems

2 AHP AHP AHPSort

3 ANP ANP
4 MAUT/UTA MAUT/UTA UTADIS
5 MACBETH MACBETH
6 PROMETHEE PROMETHEE FlowSort GAIA, FS-Gaia
7 ELECTRE I ELECTRE III ELECTRE-Tri
8 TOPSIS TOPSIS
9 Goal Programming
10 DEA DEA
11 Multi-methods platform that supports various MCDA methods

Ishizaka, A., & Nemery, P. (2013). Multi-criteria decision analysis : Methods and software. John Wiley & Sons, Incorporated.
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 GENERAL INTRODUCTION 5

Table 1.3 MCDA software programs.

Problems MCDA Methods Software

Ranking, description, PROMETHEE – GAIA Decision Lab,

choice D-Sight, Smart Picker Pro,
Visual Promethee
Ranking, choice PROMETHEE DECERNS
ELECTRE Electre IS, Electre III-IV
UTA Right Choice, UTA+, DECERNS
AHP MakeItRational, ExpertChoice,
Decision Lens, HIPRE 3+,
RightChoiceDSS, Criterium,
EasyMind, Questfox,
ChoiceResults, 123AHP,
DECERNS
ANP Super Decisions, Decision Lens
MACBETH M-MACBETH
TOPSIS DECERNS
DEA Win4DEAP, Efficiency
Measurement System, DEA
Solver Online, DEAFrontier,
DEA-Solver PRO, Frontier
Analyst
Choice Goal Programming -
Sorting, description FlowSort - FS-GAIA Smart Picker Pro
Sorting ELECTRE-Tri Electre Tri, IRIS
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UTADIS -
AHPSort -

1.4 MCDA software

Researchers and commercial companies have developed various software programs
over the last decade to help users structure and solve their decision problems. The aim
of this book is not to describe all existing software, but to narrow the list down to the
packages that apply to the methods described. A non-exhaustive list of the programs
available is given in Table 1.3. The software packages represented in this book are in
bold. Let us remark that the user has access to all the Microsoft Excel spreadsheets
on the companion website.

1.5 Selection of MCDA methods

Considering the number of MCDA methods available, the decision maker is faced
with the arduous task of selecting an appropriate decision support tool, and often

Ishizaka, A., & Nemery, P. (2013). Multi-criteria decision analysis : Methods and software. John Wiley & Sons, Incorporated.
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 6 MULTI-CRITERIA DECISION ANALYSIS

the choice can be difficult to justify. None of the methods are perfect nor can they
be applied to all problems. Each method has its own limitations, particularities,
hypotheses, premises and perspectives. Roy and Bouyssou (1993) say that ‘although
the great diversity of MCDA procedures may be seen as a strong point, it can also
be a weakness. Up to now, there has been no possibility of deciding whether one
method makes more sense than another in a specific problem situation. A systematic
axiomatic analysis of decision procedures and algorithms is yet to be carried out.’
Guitouni et al. (1999) propose an initial investigative framework for choos-
ing an appropriate multi-criteria procedure; however, this approach is intended for
experienced researchers. The next paragraphs give some guidance on selecting an
appropriate method according to the decision problem, which will avoid an arbitrary
adoption process.
There are different ways of choosing appropriate MCDA methods to solve specific
problems. One way is to look at the required input information, that is, the data and
parameters of the method and consequently the modelling effort, as well as looking
at the outcomes and their granularity (Tables 1.4 and 1.5). This approach is supported
by Guitouni et al. (1999).
If the ‘utility function’ for each criterion (a representation of the perceived utility
given the performance of the option on a specific criterion) is known, then MAUT
(Chapter 4) is recommended. However, the construction of the utility function requires
a lot of effort, but if it is too difficult there are alternatives. Another way is by using
pairwise comparisons between criteria and options. AHP (Chapter 2) and MACBETH
(Chapter 5) support this approach. The difference is that comparisons are evaluated
on a ratio scale for AHP and on an interval scale for MACBETH. The decision maker
needs to know which scale is better suited to yield their preferences. The drawback
is that a large quantity of information is needed.
Copyright © 2013. John Wiley & Sons, Incorporated. All rights reserved.

Another alternative way is to define key parameters. For example, PROMETHEE

(Chapter 6) only requires indifference and preference thresholds, whilst ELECTRE
(Chapter 7) requires indifference, preference and veto thresholds. There exist so-
called elicitation methods to help defining these parameters, but if the user wants to
avoid those methods or parameters, TOPSIS (Chapter 8) can be used because only
ideal and anti-ideal options are required. If criteria are dependent, ANP (Chapter 3)
or the Choquet integral1 can be used.
The modelling effort generally defines the richness of the output. One advantage
to defining utility functions is that the options of the decision problem have a global
score. Based on this score, it is possible to compare all options and rank them from
best to worst, with equal rankings permitted. This is defined as a complete ranking.
This approach is referred to as the full aggregation approach where a bad score on
one criterion can be compensated by a good score on another criterion.
Outranking methods are based on pairwise comparisons. This means that the
options are compared two-by-two by means of an outranking or preference degree.
The preference or outranking degree reflects how much better one option is than

1 This method has not been described in this book because it is not supported by a software package.

Ishizaka, A., & Nemery, P. (2013). Multi-criteria decision analysis : Methods and software. John Wiley & Sons, Incorporated.
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 Table 1.4 Required inputs for MCDA ranking or choice method.

Inputs Effort input MCDA method Output

utility function Very HIGH MAUT Complete ranking with scores

pairwise comparisons on a ratio scale ANP Complete ranking with scores
and interdependencies
Ranking/choice problem

pairwise comparisons on an interval MACBETH Complete ranking with scores

scale
pairwise comparisons on a ratio scale AHP Complete ranking with scores
indifference, preference and veto ELECTRE Partial and complete ranking
thresholds (pairwise outranking degrees)
indifference and preference thresholds PROMETHEE Partial and complete ranking (pairwise
preference degrees and scores)
ideal option and constraints Goal programming Feasible solution with deviation score
Copyright © 2013. John Wiley & Sons, Incorporated. All rights reserved.

ideal and anti-ideal option TOPSIS Complete ranking with closeness

score
no subjective inputs required Very LOW DEA Partial ranking with effectiveness
score

Ishizaka, A., & Nemery, P. (2013). Multi-criteria decision analysis : Methods and software. John Wiley & Sons, Incorporated.
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 8 MULTI-CRITERIA DECISION ANALYSIS

Table 1.5 Required inputs for MCDA sorting methods.

Effort
Inputs Input MCDA method Output

utility function HIGH UTADIS Classification with

scoring
pairwise comparisons AHPSort Classification with
Sorting method

on a ratio scale scoring

indifference, preference ELECTRE-TRI Classification with
and veto thresholds pairwise outranking
degrees
indifference and LOW FLOWSORT Classification with
preference thresholds pairwise outranking
degrees and scores

another. It is possible for some options to be incomparable. The comparison between

two options is difficult as they have different profiles: one option may be better based
one set of criteria and the other better based on another set of criteria. These incom-
parabilities mean that a complete ranking is not always possible, which is referred to
as a partial ranking. The incomparability is a consequence of the non-compensatory
aspect of those methods. When facing a decision problem, it is important to define
the type of output required from the beginning (presented in Tables 1.4 and 1.5).
Goal programming and data envelopment analysis (DEA) are also part of the
MCDA family but are used in special cases. In goal programming, an ideal goal can
Copyright © 2013. John Wiley & Sons, Incorporated. All rights reserved.

be defined subject to feasibility constraints. DEA is mostly used for performance

evaluation or benchmarking, where no subjective inputs are required.

1.6 Outline of the book

Following this introduction, in which general concepts of MCDA are explained, nine
chapters describe the major MCDA methods. Each chapter can be read independently,
and they are grouped into three sections, according to their approach:
r Full aggregation approach (or American school). A score is evaluated for each
criterion and these are then synthesized into a global score. This approach
assumes compensable scores, i.e. a bad score for one criterion is compensated
for by a good score on another.
r Outranking approach (or French school). A bad score may not be compensated
for by a better score. The order of the options may be partial because the notion
of incomparability is allowed. Two options may have the same score, but their
behaviour may be different and therefore incomparable.

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 GENERAL INTRODUCTION 9
r Goal, aspiration or reference level approach. This approach defines a goal
on each criterion, and then identifies the closest options to the ideal goal or
reference level.
Most chapters are divided into four sections, with the exception of specific MCDA
methods, as extensions do not exist. Specific objectives are as follows:
r Essential concepts. The reader will be able to describe the essentials of the
MCDA method.
r Software. The reader will be able to solve MCDA problems using the corre-
sponding software.
r In the black box. The reader will understand the calculations behind the method.
An exercise in Microsoft Excel facilitates this objective.
r Extensions. The reader will be able to describe the extensions of the MCDA
methods to other decision problems, such as sorting or group decisions.
The book concludes with a description of the integrated software DECERNS,
which incorporates six MCDA methods and a Geographical Information System.
Linear programming, the underlying method for MACBETH and goal programming,
is explained in the Appendix.

References
Bana e Costa, C. (1996). Les problématiques de l’aide à la décision: Vers l’enrichissement de
la trilogie choix–tri–rangement. RAIRO – Operations Research, 30(2), 191–216.
Guitouni, A., Martel, J., and Vincke, P. (1999). A framework to choose a discrete multicriterion
Copyright © 2013. John Wiley & Sons, Incorporated. All rights reserved.

aggregation procedure. Technical Report.

Keeney, R. (1992). Value-Focused Thinking: A Path to Creative Decision Making. Cambridge,
MA: Harvard University Press.
Observador (2008). The growth of class ‘C’ and its electoral importance. Observador, 31
March, p. 685.
Roy, B. (1981). The optimisation problem formulation: Criticism and overstepping. Journal
of the Operational Research Sociey, 32(6), 427–436.
Roy, B., and Bouyssou, D. (1993). Aide multicritère à la décision: Méthodes et cas. Paris:
Economica.
Wallenius, J. D., Dyer, J.S., Fishburn, P.C., Steuer, R.E., Zionts, S., and Deb, K. (2008).
Multiple criteria decision making, multiattribute utility theory: Recent accomplishments
and what lies ahead. Management Science, 54(7), 1336–1349.

Ishizaka, A., & Nemery, P. (2013). Multi-criteria decision analysis : Methods and software. John Wiley & Sons, Incorporated.
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Copyright © 2013. John Wiley & Sons, Incorporated. All rights reserved.

Ishizaka, A., & Nemery, P. (2013). Multi-criteria decision analysis : Methods and software. John Wiley & Sons, Incorporated.
Created from chalmers on 2024-01-08 09:48:49.