The Analytic Hierarchy Process, frequently referred to as AHP or the Analytical Hierarchical Process, is a popular and widely used technique for decision making, problem structuring and resource allocation. It is the brainchild of Thomas L. Saaty, professor emeritus at the University of Pittsburgh, who developed the AHP in the 1970s.
The AHP is a multi-criteria decision-making process that provides both structured and systematic decision-making strategies. At its core, AHP uses intuition and a hierarchical structure, assigning relative weights and higher order importance to factors that affect important decision outcomes. It was based on two earlier methods, the Analytic Network Process (ANP) and the Prioritization Process (PP).
The application of this process is diverse and can help in decision making in almost any context, including policy decision making, risk assessment, portfolio management and resource allocation. It is often used in business, government and military agencies, as well as in research projects.
AHP is well-known for its ability to synthesize multiple viewpoints and its consistent performance in handling uncertain situations. The process is flexible enough to be used by experts and novices alike, making it a popular technique for a variety of decision problems.
The Analytic Hierarchy Process begins with determining the goal of the problem and then creating a hierarchy addressing the issue (or set of issues). It involves breaking down complex decisions into smaller, more manageable components or criteria of analysis. The hierarchy is broken down into groups or subgroups of criteria. The relative weights of each criterion throughout the hierarchy are determined through a series of comparative pair-wise assessments as well as through quantitative analysis.
Comparing each pair-wise assessment is done using the Saaty Scale, which is a simple numerical scoring system that ranks a pair of criteria in terms of relative importance. This scale typically ranges from 1 (equal importance) to 9 (absolute importance). Once the pair-wise assessments are complete, a weighted average of the ratios is calculated to determine the overall priorities of the criteria in the hierarchy.
When using AHP, the criteria and their relative weights to any given situation can be ‘fuzzy,’ due to possible subjectivity in judgments and the use of a quantification process. To counteract this fuzziness, the Analytic Hierarchy Process also uses a wide variety of quantitative analysis, including linear programming, sensitivity analysis, sensitivity comparison, and others, in order to identify and Reduce the effects of bias or subjectivity. This helps to ensure consistent results when AHP is utilized for decision making.
The process-oriented approach of the AHP makes it a powerful and effective method for making decisions, particularly when confronted with the innumerable variables and unknown elements of the decision making process. It is widely used in many circles and is increasingly being adopted in a variety of situations and settings. The AHP is an invaluable decision making tool and a vital resource that can help organizations make sound decisions with limited resources.
