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

Multicriteria rankings of open-end investment funds and their stability

For research purposes, three multicriteria outranking methods (PROMETHEE, WSA and TOPSIS) were used to construct rankings of investment funds to assess their performance in the time period from January to July 2008. Nine indicators related to the distributions of return rates, purchase and management costs and to customers’ convenience were included in the set of criteria. The weight of each criterion was calculated on the basis of the relative volatility rate of the given criterion. In order to assess the stability of the rankings, the weight of a single criterion was changed (using each criterion in turn) and new rankings were constructed using the modified weights. The similarity of rankings built before and after these changes was assessed on the basis of the maximum difference between ranks and the Spearman correlation coefficient. The results obtained enable assessment not only of the stability of each outranking method, but the similarity of results obtained by different methods as well. All calculations were done using the SANNA software.investment funds, outranking methods, PROMETHEE method, WSA method, TOPSIS method, stability of rankings

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

Decision support system for project monitoring portfolio

Vallejo Antich, RA. (2010). Decision support system for project monitoring portfolio. http://hdl.handle.net/10251/8632.Archivo delegad

A multiple criteria supplier segmentation using outranking and value function methods

[EN] Suppliers play a key role in supply chain management which involves evaluation for supplier selection problem, as well as other complex issues that companies should take into account. The purpose of this research is to develop and test an integrated system, which allows qualifying providers and also supplier segmentation by monitoring their performance based on a multiple criteria tool for systematic decision making. This proposal consists in a general procedure to assess suppliers based mainly on exploiting all reliable databases of the company. Firstly, for each group of products, their evaluation criteria are defined collaboratively in order to determine their critical and strategic performance, which are then integrated with other criteria that are specific of the suppliers and represent relevant aspects for the company, also classified by critical and strategic dimensions. Two multiple criteria methods, compensatory and non-compensatory, are used and compared so as to point out their strengths, weaknesses and flexibility for the supplier evaluation in different contexts, which are usually relevant in the supply chain management. A value function approach is the appropriate method to qualify providers to be included in the panel of approved suppliers of the company as this process depends only on own features of the supplier. On the other hand, outranking methods such as PROMETHEE have shown greater potential and robustness to develop portfolios with suppliers that should be partners of the company, as well as to identify other types of relationships, such as long term contracts, market policies or to highlight those to be removed from their portfolio. These results and conclusions are based on an empirical research in a multinational company for food, pharmaceuticals and chemicals. This system has shown a great impact as it represents the first supplier segmentation proposal applied to industry, in which decision making not only takes into account opinions and judgements, but also integrates historical data and expert knowledge. This approach provides a robust support system to inform operative, tactical and strategic decisions, which is very relevant when applying an advanced management in practice.This research has been partially developed with the support of the Ministry of Economy and Competitiveness (Ref. ECO2011-27369) and Ministry of Education (Marina Segura, scholarship of Training Plan of University Teaching).Segura, M.; Maroto, C. (2017). A multiple criteria supplier segmentation using outranking and value function methods. Expert Systems with Applications. 69:87-100. doi:10.1016/eswa.2016.10.031S871006

R&D and innovation project selection: can optimization methods be adequate?

This article proposes a comprehensive framework for R&D and innovation project selection under uncertainty and subject to real-world constraints applicable to the Brazilian electricity sector, using a combination of integer programming formulation and a PROMETHEE-based method. The objective is to contribute to this domain by offering an approach suitable for the challenges of this sector, but also applicable to other situations involving R&D and innovation investments under similar conditions. The manuscript presents applications using real data from an electricity company. It also compares the proposed method with similar approaches found in the literature such as PROMETHEE II and V. The application revealed the best performance of the proposed framework in dealing with the sector's regulatory constraints, which emphasize the companies' accomplishment with R&D and innovation expenditures obligations. In this way, although R&D and innovation project selection is not a typical case of optimization, under some particular regional, sector-based or organization boundaries this can be a better solution. (C) 2015 Published by Elsevier B.V.This article proposes a comprehensive framework for R&D and innovation project selection under uncertainty and subject to real-world constraints applicable to the Brazilian electricity sector, using a combination of integer programming formulation and a P55613621sem informaçãosem informaçã

Project portfolio selection in a colombian holding company

The adequate project selection allows companies to invest resources in specific initiatives that allow them to achieve their strategic objectives and to become more competitive. In contrast, non-adequate projects selection can burden the organizations with large investments that do not impact positively in the organization in general. This paper shows an application of Promethee I method, fifth version, as a multi-criteria method to support the strategic projects selection process, and a sensitivity analysis that were both carried out at the beginning of the planning period in a Colombian holding company. The application of Promethee I in a base scenario, and the development of two alternative scenarios allowed to identify that in the case study’s portfolio there are projects with a very high preference, regardless of the criteria weight. Similarly, it allowed to identify the least preferred projects. These results are an important input for projects selection decision-making to be carried out by the holding company board of directors. Moreover, it was identified that the case study’s holding company should focus efforts on the relative weights definition and on the measurement scale of each criterion, as this has a significant impact on the results obtained

Decision making support for managers in innovation management: A PROMETHEE approach

The purpose of this paper is to present a decision making model as a support for selection of innovation management concept using multiple criteria decision making methods. Based on the specific nature of innovation management concepts a novel decision making model was designed. Ten defined innovation management concepts are firstly evaluated using set of criteria, which priorities are expertly evaluated using Saaty method and then the PROMETHEE outranking method is used for evaluating and selecting of innovation management concepts. To apply this model in the practice the Visual PROMETHEE software tool is incorporated to the model. The model was applied on a large manufacturing company. Using our approach in this company, the concept of value analysis was selected as the best. This study is limited for decision making processes in large companies. The results of Saaty method are based on expert but subjective assessment and therefore relevant for this particular company at that particular time. In addition, we suggest that this model can help managers to solve similar decision making problems using combination of Saaty method or analytic hierarchy process together with Visual PROMETHEE software. The logic and process of the decision making model elaboration as well as the decision model itself can be used as a framework for managers facing decision making problems with similar nature as innovation management concepts i.e.: ERP systems, information systems, technologies, business models.Web of Science6327425

Evaluation of equity mutual funds’ performance using a multicriteria methodology

The evaluation of the performance of mutual funds has been a very interesting research topic for not only researchers, but also for managers of financial, banking and investment institutions. In this study a well-known MCDA method based on the theory of outranking relations, the PROMETHEE II method (Preference Ranking Organisation Method for Enrichment Evaluations; [Brans and Vincke (1985)]) is used to develop outranking models for mutual funds’ performance. This method is applied on real-world data of mutual funds derived from the Association of Greek Institutional Investors. The results of the PROMETHEE II method are indicative of ranking the funds from the best to the worst ones according to their performance.peer-reviewe

Improving portfolio liquidity: MCDM approach to share selection on the Zagreb Stock Exchang

This article describes how investors on the Zagreb Stock Exchange (ZSE) can use Multiple Criteria Decision Making (MCDM) to select shares for investment. Both financial and market liquidity criteria are used to compare different shares. Market liquidity criteria include the average number of daily trades and the average daily turnover on the regular market. These criteria help to determine the liquidity of shares in the secondary market, which is the main contribution of this research.The investment selection proposal is based on the PROMETHEE. The performance of the portfolio constructed using the Modern Portfolio Theory (MPT) was tested. Predictably, the inclusion of liquidity criteria in the share selection process resulted in an increase in the liquidity of the portfolio, an effect that is clearly evident after 2019. However, such a portfolio does not provide significantly different returns compared to a scenario where liquidity criteria are excluded from share selection process. Reading this paper provides an insight into how to make investment decisions based on criteria consistent with investors’ objectives in an developing capital market