Multi crteria decision making and its applications : a literature review

This paper presents current techniques used in Multi Criteria Decision Making (MCDM) and their applications. Two basic approaches for MCDM, namely Artificial Intelligence MCDM (AIMCDM) and Classical MCDM (CMCDM) are discussed and investigated. Recent articles from international journals related to MCDM are collected and analyzed to find which approach is more common than the other in MCDM. Also, which area these techniques are applied to. Those articles are appearing in journals for the year 2008 only. This paper provides evidence that currently, both AIMCDM and CMCDM are equally common in MCDM

Using the strategic relative alignment index for the selection of portfolio projects application to a public Venezuelan Power Corporation

In this paper a new approach that uses the alignment of projects with corporate strategic objectives to prioritize project portfolio in an efficient and reliable way is presented. For this purpose, corporate strategic objectives will be used as prioritization criteria to obtain the Relative Alignment Index (RAI) of each project which indicates how close or far each project is from the strategic objectives of the company. The approach presented uses the Analytic Network Process. This technique allows considering the influences among all the elements within the network, that means, the strategic objectives, and specially the projects within a portfolio. The proposed RAI index helps to select the best strategically aligned projects for the organization. The proposed RAI index and its form of evaluation have not previously been considered in the project portfolio literature until now. The research methodology for the development of RAI is based on a combination of a synthesis of the literature across the diverse fields of project management, project alignment, multicriteria decision methods and a parallel analysis of an industrial case study. The use of the proposed RAI index is demonstrated using a rigorous methodology with acceptable complexity which seeks to assist managers of the National Electricity Corporation of Venezuela, recently founded and composed by 13 merging old companies, both public and private, in their yearly resources' assignment on their projects portfolio. The aim being to determine a projects 'ranking based on their degree of alignment to corporate strategy and on the judgments of a group of experts, such as the management board. The new corporation assumed the challenge of setting strategic directions (Mission, Vision, Values, Strategic objectives, Plans, Programs, etc.) common to all merging companies. This approach with multi-stakeholders support allows managers to strategically allocate resources to each project in a consensual way.García-Melón, M.; Poveda Bautista, R.; Del Valle, JL. (2015). Using the strategic relative alignment index for the selection of portfolio projects application to a public Venezuelan Power Corporation. International Journal of Production Economics. 170:54-66. doi:10.1016/j.ijpe.2015.08.023S546617

Updating, Upgrading, Refining, Calibration and Implementation of Trade-Off Analysis Methodology Developed for INDOT

As part of the ongoing evolution towards integrated highway asset management, the Indiana Department of Transportation (INDOT), through SPR studies in 2004 and 2010, sponsored research that developed an overall framework for asset management. This was intended to foster decision support for alternative investments across the program areas on the basis of a broad range of performance measures and against the background of the various alternative actions or spending amounts that could be applied to the several different asset types in the different program areas. The 2010 study also developed theoretical constructs for scaling and amalgamating the different performance measures, and for analyzing the different kinds of trade-offs. The research products from the present study include this technical report which shows how theoretical underpinnings of the methodology developed for INDOT in 2010 have been updated, upgraded, and refined. The report also includes a case study that shows how the trade-off analysis framework has been calibrated using available data. Supplemental to the report is Trade-IN Version 1.0, a set of flexible and easy-to-use spreadsheets that implement the tradeoff framework. With this framework and using data at the current time or in the future, INDOT’s asset managers are placed in a better position to quantify and comprehend the relationships between budget levels and system-wide performance, the relationships between different pairs of conflicting or non-conflicting performance measures under a given budget limit, and the consequences, in terms of system-wide performance, of funding shifts across the management systems or program areas

A Multidimensional Framework for Financial-Economic Decisions

Most financial-economic decisions are made consciously, with a clear and constant drive to ???good???, ???better??? or even ???optimal??? decisions. Nevertheless, many decisions in practice do not earn these qualifications, despite the availability of financial economic theory, decision sciences and ample resources. We plea for the development of a multidimensional framework to support financial economic decision processes. Our aim is to achieve a better integration of available theory and decision technologies. We sketch (a) what the framework should look like, (b) what elements of the framework already exist and which not, and (c) how the MCDA community can co-operate in its development.decision making;finance;decision analysis;financial decisions;multiple criteria

Stability Analysis in Multicriteria Discrete Portfolio Optimization.

Almost every problem of design, planning and management in the technical and organizational systems has several conflicting goals or interests. Nowadays, multicriteria decision models represent a rapidly developing area of operation research. While solving practical optimization problems, it is necessary to take into account various kinds of uncertainty due to lack of data, inadequacy of mathematical models to real-time processes, calculation errors, etc. In practice, this uncertainty usually leads to undesirable outcomes where the solutions are very sensitive to any changes in the input parameters. An example is the investment managing. Stability analysis of multicriteria discrete optimization problems investigates how the found solutions behave in response to changes in the initial data (input parameters). This thesis is devoted to the stability analysis in the problem of selecting investment project portfolios, which are optimized by considering different types of risk and efficiency of the investment projects. The stability analysis is carried out in two approaches: qualitative and quantitative. The qualitative approach describes the behavior of solutions in conditions with small perturbations in the initial data. The stability of solutions is defined in terms of existence a neighborhood in the initial data space. Any perturbed problem from this neighborhood has stability with respect to the set of efficient solutions of the initial problem. The other approach in the stability analysis studies quantitative measures such as stability radius. This approach gives information about the limits of perturbations in the input parameters, which do not lead to changes in the set of efficient solutions. In present thesis several results were obtained including attainable bounds for the stability radii of Pareto optimal and lexicographically optimal portfolios of the investment problem with Savage's, Wald's criteria and criteria of extreme optimism. In addition, special classes of the problem when the stability radii are expressed by the formulae were indicated. Investigations were completed using different combinations of Chebyshev's, Manhattan and Hölder's metrics, which allowed monitoring input parameters perturbations differently.Siirretty Doriast

MULTI CRITERIA DECISION MAKING MODELS: AN OVERVIEW ON ELECTRE METHODS

In portfolio analysis, there are a few models that can be used. Therefore, the aim of this paper is to make an overview on multi criteria decision making models, in particular, on ELECTRE methods. We discuss the different versions of ELECTRE, which exist and why they exist. So, when speaking about ELECTRE methods structure, we have to consider two main procedures: construction of one or several outranking relation(s) procedure, and exploitation procedure. In the exploitation procedure, recommendations are elaborated from the results obtained in the first phase. The nature of the recommendation depends on the problematic: choosing, ranking or sorting. Each method is characterized by its construction and exploitation procedure. For choice problem, we can apply ELECTRE I, ELECTRE Iv, and ELECTRE IS; for ranking problem, we can apply ELECTRE II, ELECTRE III, ELECTRE IV and ELECTRE-SS; and for sorting problem we can apply ELECTRE TRI. Finally, some failings on ELECTRE methods assumptions are discussed, for instance, rank reversals. So, when analyzing portfolio management decision problem, the literature suggests AHP method and PROMETHEE family.CAPM; decision problem; multi criteria decision making models; ELECTRE family; ELECTRE rank reversals

ANALYSIS OF THE ALTERNATIVE INVESTMENTS AS BASES FOR THE BUSINESS DECISION MAKING

In the process of investment decision making it is not only the question if some investment has to be made, but it has frequently appear the problem of selection the best investments between two or more alternatives. For selection of investments that compinvestment decision, economic indicators ,net present value

Project Portfolio Selection Using Interactive Approach

AbstractIn the paper project portfolio selection problem is considered. Both researchers, as well as practitioners agree that various criteria, including both quantitative and qualitative ones, should be taken into account when the project portfolio is constructed. Various decision aiding techniques dedicated for project portfolio selection problems are proposed in literature. Most of them assume that the information about the decision-maker's preferences is collected before starting the calculation procedure. Several criticisms have been expressed against such approach. The assessment of the sufficient a priori preference information is inconvenient and time consuming. Moreover, as the decision maker is not employed in the second phase of the procedure, when the final solution is generated, so he/she may feel excluded from the important part of the analysis and put little confidence in a final result. In the paper a concept of a new methodology based on interactive approach is presented. It assumes, that a single portfolio is proposed to the decision maker in each iteration. The decision maker evaluates the proposal, thus indicating how to improve the solution. A simple example is presented to explain how the dialog with the decision maker can be carried out