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Journal ArticleDOI

An extension of the analytic hierarchy process for industrial R&D project selection and resource allocation

01 Feb 1987-IEEE Transactions on Engineering Management (IEEE)-Vol. 34, Iss: 1, pp 12-18
TL;DR: In this article, an extension of the Analytic Hierarchy Process (AHP) for priority setting and resource allocation in the industrial R&D environment is explored, and an AHP modeling framework is developed, and is linked to a spreadsheet model to assist in the ranking of a large number of project alternatives.
Abstract: The research and development project selection decision is concerned with the allocation of resources to a set of proposals for scientific and engineering activities. The project selection and resource allocation process can be viewed as a multiple-criteria decision-making problem, within the context of the long-range and strategic planning process of the firm. The purpose of this paper is explore the applicability of an extension of the Analytic Hierarchy Process (AHP) for priority setting and resource allocation in the industrial R&D environment. In this paper, an AHP modeling framework for the R&D project selection decision is developed, and is linked to a spreadsheet model to assist in the ranking of a large number of project alternatives. Next, cost-benefit analysis and integer programming are used to assist in the resource allocation decision. The paper concludes with an evaluation of the suitability of this approach as an expert support system, and directions for future research and testing.
Citations
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Journal ArticleDOI
TL;DR: A literature review of the applications of Analytic Hierarchy Process, which aims to provide a ready reference on AHP, and act as an informative summary kit for the researchers and practitioners for their future work.

2,717 citations

Journal ArticleDOI
TL;DR: An integration of a analytical hierarchy process and linear programming is proposed to consider both tangible and intangible factors in choosing the best suppliers and placing the optimum order quantities among them such that the total value of purchasing (TVP) becomes maximum.

1,199 citations

Journal ArticleDOI
TL;DR: An AHP-based model is formulated and applied to a real case study to examine its feasibility in selecting a vendor for a telecommunications system and it is found that the decision process is systematic and that using the proposed AHP model can reduce the time taken to select a vendor.
Abstract: Vendor selection of a telecommunications system is an important problem to a telecommunications company as the telecommunications system is a long-term investment for the company and the success of telecommunications services is directly aected by the vendor selection decision. Furthermore, the vendor selection of a telecommunications system is a complex multi-person, multi-criteria decision problem. The group decision-making process can be improved by a systematic and logical approach to assess priorities based on the inputs of several people from dierent functional areas within the company. The analytic hierarchy process (AHP) can be very useful in involving several decision-makers with dierent conicting objectives to arrive at a consensus decision. In this paper, an AHP-based model is formulated and applied to a real case study to examine its feasibility in selecting a vendor for a telecommunications system. The use of the proposed model indicates that it can be applied to improve the group decision making in selecting a vendor that satises customer specications. Also, it is found that the decision process is systematic and that using the proposed AHP model can reduce the time taken to select a vendor. ? 2001 Elsevier Science Ltd. All rights reserved.

667 citations


Cites background or methods from "An extension of the analytic hierar..."

  • ...Or, as suggested by Liberatore [17,18], we can nd the mean and the median of the global priority weights of vendor systems of team members and use them to select the best vendor....

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  • ...The use of a rating scale instead of direct pairwise comparisons among alternatives can be found in Liberatore’s studies [14,17–19]....

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  • ...The major advantage of this method is to overcome the explosion in the number of required comparisons when the number of alternatives is large [17]....

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Journal ArticleDOI
TL;DR: The paper discusses the use of the ANP, a general form of Saaty's analytic hierarchy process, as a model to evaluate the value of competing R&D project proposals, and presents a generic ANP model developed by the authors.
Abstract: The analytic network process (ANP) is presented as a potentially valuable method to support the selection of projects in a research and development (R&D) environment. This paper first discusses the requirements of the R&D project selection problem, which requires the allocation of resources to a set of competing and often disparate project proposals. Among the factors complicating this task is the need to make the decision within the framework of an enterprise's strategic objectives and organizational structure while considering and integrating financial and strategic benefits of each project. The paper discusses the use of the ANP, a general form of Saaty's analytic hierarchy process, as a model to evaluate the value of competing R&D project proposals. A generic ANP model developed by the authors, which includes in its decision levels the actors involved in the decision, the stages of research, categories of metrics, and individual metrics, is presented. The paper concludes with a case study describing the implementation of this model at a small high-tech company, including data based on the actual use of the decision making model.

552 citations


Cites background or methods from "An extension of the analytic hierar..."

  • ...R&D contributions are difficult to measure separately from other functional organizations such as manufacturing and marketing [15]....

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  • ...The categories and specific measures used for this model are adapted from several sources including [6], [15]–[17]....

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  • ...Wrong decisions can result i the tying up of significant resources and lead to loss of trategic and market position [15]....

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Journal ArticleDOI
TL;DR: The analytical hierarchy process (AHP) is a decision-making method for ranking alternative courses of action when multiple criteria must be considered as mentioned in this paper, such as quality, price, delivery, and service.
Abstract: The supplier selection problem is perhaps the most important component of the purchasing function. Some of the common and influential criteria in the selection of a supplier include quality, price, delivery, and service. These evaluation criteria often conflict, however, and it is frequently impossible to find a supplier that excels in all areas. In addition, some of the criteria are quantitative and some are qualitative. Thus, a methodology is needed that can capture both subjective and objective evaluation measures. The Analytic Hierarchy Process (AHP) is a decision-making method for ranking alternative courses of action when multiple criteria must be considered. This article shows how AHP can be used to structure the supplier selection process. This method of selection is described, and a detailed, hypothetical example of how AHP can be used also is provided. Finally, a framework is presented that any buying organization can adapt to fit its specific set of needs. INTRODUCTION Supplier selection may be the single most important phase of the purchasing process.[1] The objection of this stage is to find the optimal supplier - not necessarily the supplier offering the best technical service or the lowest price or the shortest delivery. Thus, firms must consider multiple criteria in their attempts to distinguish between items offered by potential suppliers.[2] This article presents a framework that can be used to formalize the process of evaluating the tradeoffs between the conflicting selection criteria established by purchasers. Current Developments in Supplier Selection The past few years have seen the relationship between the buyer and the supplier change.[3] Historically adversarial or quasi-adversarial relationship between the buyer and the seller often existed. However, current business trends, including shortened product life cycles, increased rates of technological change, and foreign sourcing,[4] have given rise to a growing trend toward improved communication and cooperation between the two parties, as well as the possibility of single sourcing rather thant multiple sourcing. The implications of these recent developments are that the supplier selections decisions is becoming even more important. If buyers are less willing to change suppliers, the choice of an unacceptable supplier is more damaging than it was previously. In addition, once an acceptable supplier is identified, the buyer has an opportunity to establish a long-term relationship with the supplier, which may provide a strategic advantage.[5] The Supplier Seclection Procedure When a supplier selection decision needs to be made, the buyer generally establishes a set of evaluation criteria that can be used to compare potential sources.[6] The basic criteria typically utilized for this purpose are pricing structure, delivery (timeliness and costs), product quality, and service (i e., personnel, facilities, research and development, capability, etc.).[7] For global markets, the set of criteria is expanded to take into account the new variables an risks associated with international business transactions.[8] Frequently, these evaluation criteria conflict with one another. For example, one supplier may offer inexpensive parts that have slightly below average quality, while another supplier may offer higher quality parts, with uncertain, delivery. In addition, the importance of each criterion varies from one purchase to the next. This situation can be complicated further by the fact that some of the criteria are quantitative (price and perhaps quality) and some are qualitative (service). Thus, technique is needed that can adjust for the decision maker's attitude toward the importance of each criterion for each item, as well as capture both subjective and objective criteria. Two approaches commonly used to assess supplier performance - and subsequently to assist in the sourcing decision - are the categorical and the weighted point evaluation plans. …

478 citations

References
More filters
Journal ArticleDOI
TL;DR: A method of scaling ratios using the principal eigenvector of a positive pairwise comparison matrix is investigated, showing that λmax = n is a necessary and sufficient condition for consistency.

8,117 citations

Journal ArticleDOI
TL;DR: The thrust of the paper is a discussion of a number of illustrative applications of the AHP covering the following areas: the portfolio decisions of a firm whose management is concerned with the determination of the desired target portfolio and allocation of resources among its components.
Abstract: Several marketing applications of the Analytic Hierarchy Process AHP are reviewed. The paper starts with a brief description of this process, which was developed by Thomas Saaty in 1971, including an eight-point outline of how to apply it. The thrust of the paper is a discussion of a number of illustrative applications of the AHP covering the following areas: the portfolio decisions of a firm whose management is concerned with the determination of the desired target portfolio and allocation of resources among its components, determination of the directions for new product development, and generation and evaluation of marketing mix strategies. Various suggestions for additional research on the AHP and its marketing applications are highlighted.

986 citations

Journal ArticleDOI
TL;DR: In this article, the authors explore various methods for reducing the complexity of the preference eliciting process in a group decision-making session, where the group structures the problem in a hierarchical framework and pairwise comparisons are elicited from the group for each level of the hierarchy.

406 citations


"An extension of the analytic hierar..." refers methods in this paper

  • ...Harker [13] presents the theory for a method which reduces the number of required pairwise comparisons....

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Journal ArticleDOI
TL;DR: In this paper, Saaty et al. compared five conceptually different approaches in terms of their weights and predictive ability, and found that on average, the methods predicted about equally well, except for unit weighting which was clearly inferior.
Abstract: Several studies this past decade have examined differences between holistic and decomposed approaches to determining weights in additive utility models. Some have argued that it matters little which procedure is used, whereas others strongly favored particular methods. In this paper we address this controversy experimentally by comparing five conceptually different approaches in terms of their weights and predictive ability. The five methods are 1 multiple linear and non-linear regression analyses of ten and fifteen holistic assessments, 2 direct decomposed tradeoffs as proposed by Keeney and Raiffa Keeney, R. L., H. Raiffa. 1977. Decisions with Multiple Objectives. Wiley, New York., 3 a recent eigen-vector technique of Saaty Saaty, T. L. 1977. A scaling method for priorities in hierarchical structures. J. Math. Psych.15 3 234-281. involving redundant pairwise comparisons of attributes, 4 a straightforward allocation of hundred importance points, and 5 unit weighting i.e., equal weighting after standardizing the attributes. The decision task involved college admissions. Subjects were asked to evaluate hypothetical college applicants on the basis of verbal SAT, quantitative SAT, high-school grade point average, and a measure of extra-curricular activity. Linear as well as nonlinear attribute utility functions were used in constructing the additive models. The nonlinear functions were specified graphically by the subjects through selection from five different shapes i.e., one per attribute. To test the predictive ability of the various models, each subject made twenty separate pairwise comparisons of alternatives including direction and strength of preference. The prediction criteria were percentage correct predictions as well as correlations using these twenty pairs. Seventy subjects were tested, using an order-controlled within-subject design, in comparing the different methods of weight determination. Monetary incentives were used to enhance motivation. In terms of findings, the methods generally differed systematically concerning the weights given to the various attributes, as well as the variances of the resulting predictions. On average, however, the methods predicted about equally well, except for unit weighting which was clearly inferior. The findings differ in this regard from the general literature. Furthermore, nonlinear models were found to be inferior to linear ones. Finally, subjects judged the methods to differ significantly in difficulty and trustworthiness, which were found to correlate inversely. The overall results raise various applied and theoretical issues, which are discussed.

405 citations

Journal ArticleDOI
TL;DR: The existing normative R&D benefit measurement and project selection literature is assessed and the limitations inherent in the proposed models are determined.
Abstract: The R&D project selection decision is described as a process by which an intermittent stream of changes are made to lists of currently active and proposed projects It includes generating alternatives, determining when a decision is required, collecting data, specifying constraints and criteria, and recycling The decision is viewed as imbedded within a hierarchical, diffuse budgeting and planning process Process characteristics such as multiple criteria whose relative importance varies over time, inherent uncertainty and parameter interrelationships result in a highly complex decision problem The existing normative R&D benefit measurement and project selection literature is assessed and the limitations inherent in the proposed models are determined A number of research opportunities are identified for both methodological and empirical studies

177 citations


"An extension of the analytic hierar..." refers background in this paper

  • ...Mandakovic and Souder [7,2] develop a decomposable 0-1 model with potential application in hierar­ chical technology-based organizations....

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