Organizations choices. To take a decision, it helps

Organizations
come across situations quite frequently where they are faced with more than one
alternative to choose from based on complex criteria. Even individuals happen
to decide on best option among the available choices. This is especially
important when the decision is going to affect the individual for long term,
e.g. buying a car, purchasing a property, choosing a college, career or job,
etc. Decisions depend not just on money factor, but many other involved
factors. In 1980, Thomas L. Saaty – a distinguished professor at the University
of Pittsburgh, developed a model to address this issue. The model called AHP is
a decision making structured framework for organizing and analyzing complex
decisions. It inherits the wisdom of Mathematics as well as Psychology. It
enables us to make a concrete choice based on prescribed calculations and
apparently abstract decision-making criteria.

After its first
introduction by Prof. Thomas L. Saaty, AHP has been an extensively studied
topic and has gone through many refinements since then. It has been used
worldwide in a variety of situations and fields such as business, government,
health care, education, individual decisions, etc. It is said that, if properly
applied it can even help in choosing an appropriate life-partner among given
choices.

To take a
decision, it helps with a comprehensive and rational framework to represent and
quantify all the decisive elements and relating those elements to overall
goals. A problem is decomposed into a hierarchy of more easily understandable
sub-problems down to the unit level where pairwise comparison is to be done
between two units of elements. Each of these can be evaluated and analyzed
independently. The elements can be of any aspect of the problem – directly
quantified or not, carefully measured or poorly estimated, thoroughly
understood or not – anything which applies in the decision making at hand. Once
hierarchy is established, pairwise systematic evaluation of each unit is done
in reference to the impact they might have on elements superseding them in the
hierarchy. As already depicted, in addition to concrete data, judgments of the
relative importance of each element is also incorporated. Essentially, it
derives ratio scales from paired comparisons. This is the beauty of AHP – to
utilize not just the underlying information but also human judgments however
abstract to perform evaluations. In the process, it also evaluates alternative solutions.
AHP also allows some inconsistency in human judgment. So, instead of giving a
“right” decision, it helps in understanding of the problem and discovering the
best suited option. Analytical Hierarchy Process is hence both a mathematical
and psychological method.