The document discusses the analytical hierarchy process (AHP), a multiple criteria decision making method. It begins with an introduction of the creator of AHP, Thomas Saaty. It then explains the steps of AHP which include establishing a goal, selecting criteria, making pairwise comparisons, and deriving weights to identify the best alternative. As an example, AHP is applied to selecting a notebook based on price, warranty, and customer service criteria. Low price receives the highest weight of 37.9% followed by software cost and style. The discussion notes that AHP converts ordinal scale preferences into ratio scale outputs.

1. International Business© Farrukh Javaid I Farrukh.Javaid@outlook.com I Marketing Research in International Business I MIB I HTW Berlin
LinkedIn Profile :de.linkedin.com/in/javaidfarrukh
The Analytical Hierarchy Process:
A Multiple Criterion Based Decision Making Method
Advanced Marketing
01.12.2015

2. International Business© Farrukh Javaid I Farrukh.Javaid@outlook.com I Marketing Research in International Business I MIB I HTW Berlin
LinkedIn Profile :de.linkedin.com/in/javaidfarrukh
Table of Contents
1. Introduction to Author
2. Analytical Hierarchy Process & Steps
3. Example
4. Discussion
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3. International Business© Farrukh Javaid I Farrukh.Javaid@outlook.com I Marketing Research in International Business I MIB I HTW Berlin
• LinkedIn Profile :de.linkedin.com/in/javaidfarrukh.
Prof. Thomas L. Saaty Invented and Proposed Analytic Hierarchy Process in 1970
 Professor Thomas L Saaty currently in
University of Pittsburgh
 Method Put forward in 1970
 Multiple times being reviewed and Refined
 Numerous Books and research Articles have
been Written.
 Only One mentioned below
Sources: http://www.nae.edu/30894.aspx
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4. International Business© Farrukh Javaid I Farrukh.Javaid@outlook.com I Marketing Research in International Business I MIB I HTW Berlin
• LinkedIn Profile :de.linkedin.com/in/javaidfarrukh.
Analytical Hierarchy Process is Multiple Criterion Method based on Pairwise Comparison and
Weight Derivation from Preferential Choice Which leads to Formulation of Best Alternative
What is Analytical Hierarchy Process?
• It is a Multiple Criterion Based Decision Making Tool
• First Stage Involves establishing a goal
• Second Stage involves Selection of Criterion by human
perception and Pair wise comparison.
• Comparison Matrix that leads us to Eigen Vector and
Weightage of Alternatives Called Priority Matrix
2. Number of Comparisons
Goal
Criterion 1 Criterion 2 Criterion 3 Criterion 4
Alternative
1
Alternative
2
1. Stages of Hierarchy
0
1
2
No. 1 2 3 4 5 6 7 n
Comparisons 0 1 3 6 10 15 21 n(n-1)/2
3. Pairwise Comparison Scale
 If Judgement Value on Right, Exact value is written.
 If Judgement Value on Left, Reciprocal values written
4. Comparison Matrix & Priority Matrix
Best Alternative
Sources: http://www.colorado.edu/geography/leyk/geog_5113/readings/saaty_2008.pdf
http://www.saycocorporativo.com/saycouk/bij/journal/vol4no1/article_11.pdf
Methods, Models, Concepts & Application of Analytical Hierarchy Process by Thomas L. Saaty. P (2-7)
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5. International Business© Farrukh Javaid I Farrukh.Javaid@outlook.com I Marketing Research in International Business I MIB I HTW Berlin
• LinkedIn Profile :de.linkedin.com/in/javaidfarrukh.
Implementing Analytical Hierarchical Process on Note Book Selection further helps in
Understanding this Multi Criterion Tool
1.Selection of Notebook / My preferences
Source: http://bpmsg.com/academic/ahp_calc.php?n=3&t=AHP+priorities&c[0]=Low+Price+&c[1]=Warranty&c[2]=Customer+Service
Note Book
Selection
Low
Price
Software
Cost
Style
2. Pairwise Preferential Scaling
4. Comparison matrix
5. Priority Matrix
 While selecting the note book my highest priority is Low
Price which exhibits Weightage of 37.9 % followed by
Software Cost 33.1% and Style 28.9%
3. Explanation of Scale
 Low Price is 3x important than Software Cost(3)
 Style is 2x important than Low Price (1/2)
 Software Costs are 3x important than Style(3)
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6. International Business© Farrukh Javaid I Farrukh.Javaid@outlook.com I Marketing Research in International Business I MIB I HTW Berlin
• LinkedIn Profile :de.linkedin.com/in/javaidfarrukh.
Discussion and Question
Question: In Analytical Hierarchy Process which two Scales are being used and
interchanged from input to output ?
Answer: In Analytical Hierarchy Process Ordinal Scale is used as input which is then
converted into Ratio scale
Thank You for your Kind Attention
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