Introduction
The Analytic Hierarchy Process (AHP ) is a decision-making tool developed in the 1970s by Thomas Saaty that’s used by individuals or groups to prioritize and make choices based on their preferences and beliefs. It allows decision-makers to analyze the different options available to them and assign weights to those options to accurately determine the most beneficial option. The AHP method is widely used in decision-making in areas such as operations research, engineering design, healthcare, government, and market research.
The Analytic Hierarchy Process is based on the concept of setting up hierarchy between the objectives and goals of an organization, and assessing the rank of importance for those goals. This helps decision-makers in setting up a well-structured decision-making system, where the highest ranked goals can be given the highest priority and decisions can be taken accordingly. The AHP process also helps to analyze the risk and uncertainties involved in each decision as well as the expected financial returns.
How AHP Works
At the core of the AHP process lies a structure of criteria used to define each of the goals and objectives of an organization. Each criterion is then divided into a hierarchy of sub-criteria and those are further divided into the various choices to be made. Each of the criteria and their sub-criteria are then assigned weights based on the importance of the requirement.
The AHP method uses a comparison matrix to compare each option relative to the other options available. Preference scores (ranging from 0-1) are assigned based on the decision-holders answers relative to the comparison made. The scores are then multiplied by a weight assigned to each criterion and then added up to get a total for each option. After assessing all the options the option with the highest total becomes the most preferred solution.
Benefits of AHP
The AHP process is more efficient and accurate than other decision-making methods as it accounts for both hard data as well as subjective opinions while making a decision.
This makes the decision-making process more democratic and there is a higher probability of consensus among the decision makers.
The AHP method is also helpful in identifying the various factors that members of the decision-making group may not have initially realized where influencing their decisions.
The process is also quite flexible and can be easily adapted to different decision-making situations. It is also easy to use and understand, making it ideal for most decision-making situations.
Conclusion
The Analytic Hierarchy Process (AHP) is a decision-making tool that is proving to be very useful in a wide variety of decision-making situations. From business decisions to government policy-making, the AHP helps decision-makers make better decisions by allowing them to consider all the various factors involved in a situation. It is an efficient and accurate way of making decisions as it accounts for both objective and subjective factors as well as reducing the risk of financial losses associated with decisions. It is a flexible method of decision making and can be adapted to different situations and is easy to use and understand.
