The Analytic Hierarchy and Analytic Network Measurement Processes: The Measurement of Intangibles

Abstract

Multicriteria thinking demonstrates that in order to make a best choice in a decision, discussion and cause-effect reasoning are inadequate to learn what the best overall outcome is. The Analytic Hierarchy Process (AHP) and its generalization to dependence and feedback, the Analytic Network Process (ANP), provide a comprehensive structure and mathematics to incorporate measurements for tangible criteria and derive priorities for intangible criteria to enable one to choose a best alternative for a decision. It overcomes so-called bounded rationality that is based on the assumption of transitivity by including in its structures and calculations, the sensitivity and depth of feelings associated with understanding and the imagination and awareness needed to address all the concerns. The AHP can cope with the inherent subjectivity in all decision making, and make it explicit to the stakeholders through relative quantitative priorities. It also provides the means to validate outcomes when measurements are available to show that it does not do number crunching without meaningful justification. It can deal with the benefits, opportunities, costs and risks separately and bring them together to determine the best overall outcome. One can also perform dynamic sensitivity analysis of changes in judgments to ensure that the best outcome is stable. In an award from the Institute for Operations Research and the Management Sciences (INFORMS) given to the author in October 2008 it is written: “The AHP has revolutionized how we resolve complex decision problems... the AHP has been applied worldwide to help decision makers in every conceivable decision context across both the public and private sectors, with literally thousands of reported applications.”

this chapter which originally appeared in Int. J. Applied Decision Sciences, Vol. 1, No. 1, 2008 [7] (Interscience retains the copyright), is based on material provided by this author and on his research

visiting student who assisted in preparation of paper