Multi Criteria Decision Making Goal Programming MAUT Multi

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 Environmental Evaluation

Environmental Evaluation Criteria • • • History Animals Vegetation Water System Landscape Recreation

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 • Pros: – Doable – Pairwise Comparison – Consistency Index • Cons: – The AHP Scale (1 -9) – Many alternatives

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 • • • 1 3 5 7 9 Equal importance Moderately more important Strongly more important Very strongly more important Extremely more important

Pairwise Comparison • Wi = Weight of criteria i W 1/W 1 W 1/W 2 W 1/Wn W 2/W 1 W 2/W 2 W 2/Wn • Wn/W 1 Wn/W 2 Wn/Wn • • A=

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 => RI = 8 0 0, 58 0, 90 1, 12 1, 24 1, 32 1, 41

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 • 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 • 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 – 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.