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

Multi-Criteria Decision Making for Photovoltaic Alternatives: A Case Study in Hot Climate Country

Photovoltaic (PV) experiences significant growth and has installed in many locations worldwide over the past decades. However, selecting the best alternative of PV system remains a problem in developing countries which often involves both interest and multiple objectives and from stakeholders. This research aims to select ideal PV model in an isolated island in the eastern part of Indonesia. Multi-criteria decision making (MCDM) will provide an ideal solution that uses a systematic process of decision making. This research proposes an alternative concept of MCDM by taking into account best-worst method and VIKOR method. In general, the main purpose of the both methods are to obtain weights and rank alternatives with the advantages of less information required and produce a more consistent result compared to AHP method. The result shows the best alternative for PV installation, which offers the highest power and potentially developed not only for daily access to electricity but also to support economic activities such as tourism and aquaculture

Multi-criteria Analysis for the Selection of the Best Energy Efficient Option in Urban Water Systems

AbstractThis paper presents the application of multi-criteria decision analysis to select the best energy efficient option for a water supply system. The case study is a part of the Multi-Municipal Water Supply System (MMWSS) for the Algarve region in Portugal. There is a micro-hydropower plant installed in one of the two water treatment plants. The system has two operating schemes due to the seasonality of tourism: one for the high season from June to September; and the other one for the low season from October to May. The aim of the analysis is to compare the energy efficiency of the system for the two operating schemes and for different demands. Energy audits (i.e., hydraulic energy balance along the pipe system) are carried out for each option (pair operating scheme – demand). Different energy efficiency metrics are calculated and two different multi-criteria analysis methods are used and compared to rank the options. Results obtained are discussed and the main conclusions are presented

Project Finance and MCDM financial models: An application in renewable energy projects

Tesis por compendio[EN] Academics, managerial and policy making community reinforce that renewable energy investments are one of the most effective instruments to attain CO2 emission reduction targets set by the Kyoto Protocol and by the recent Paris Agreement signed at the Paris climate conference (COP21) in December 2015 in which 195 countries adopted the first-ever universal, legally binding global climate deal. The problem of financing Renewable Energy (RE) projects has become a crucial issue for private and public decision makers worldwide. Budget constraints from governments and limited bank lending capacities have led to a reconsideration of the traditional financial instruments in the RE sector. The lack of credit makes impossible for commercial banks to fund RE projects with traditional loans. Research on new financing techniques for RE projects, such as Project Finance (PF) has gained interest in recent years. PF is a recent technique applied in large investments projects. During the last decades of the 20th century new public private partnership schemes enabled large infrastructure, energy and environmental projects. In these sectors PF has been used to reduce cost agency conflicts and better risk management. There is a wide number of contributions underlying the relevance of RE, however there is a lack of research on the financial aspects of RE projects. This research aims to make several contributions. First, to provide a better understanding of the PF technique and its use in the RE sector. Second, to fill the gap of research on financial aspects of RE in the literature by reviewing contributions of MCDM to RE project evaluation from the investor's perspective. Third, we propose a MPDM Moderate Pessimism Decision Making model, which adds to the rational financial evaluation of investment opportunities a set of non-financial factors that affects the investor's decisions. Finally, within the illustrative example, we apply this multi-criteria decision making process to help banks to decide if they must join a project or not.[ES] Investigadores, comunidad empresarial y clase política destacan que la inversión en energías renovables es uno de los instrumentos más efectivos para alcanzar los objetivos de reducción de CO2 establecidos por el reciente acuerdo firmado en la conferencia de Paris (COP21) en diciembre de 2015, en el cual, 195 países adoptaron el primer acuerdo universal y jurídicamente vinculante de la historia. El problema de la financiación de los proyectos de energía renovable (RE) es un tema crucial para cualquier decisor público o privado. Las limitaciones presupuestarias de los gobiernos y la falta de crédito han provocado que se reconsideren los instrumentos de financiación en el sector de las RE, por lo tanto, la investigación en nuevas técnicas de financiamiento para los proyectos de RE, como Project Finance (PF) ha ganado interés en los últimos años. PF es una técnica que se aplica en grandes proyectos de inversión. A finales del Siglo XX, los nuevos esquemas de colaboración público-privadas han permitido llevar a cabo grandes proyectos de infraestructuras y de RE. En estos sectores, el PF se ha utilizado para reducir costes, conflictos y mitigar riesgos. Numerosas contribuciones científicas subrayan la importancia de la RE, sin embargo hay un vacío en la investigación sobre los aspectos financieros de los proyectos de RE. Esta tesis tiene como objetivo aportar varias contribuciones. En primer lugar, proporcionar una mejor comprensión de la técnica del PF y su uso en el sector de las RE. En segundo lugar, cubrir el vacío existente en la literatura sobre la investigación de los aspectos financieros de las RE mediante la revisión de las contribuciones sobre MCDM para la evaluación de los proyectos de RE desde el punto de vista del inversor. En tercer lugar, se propone un modelo MPDM (Moderate Pessimism Decision Making), el cual añade a la evaluación financiera racional de oportunidades de inversión, un conjunto de factores no financieros que afectan a las decisiones de los inversores. Finalmente, se aplica este modelo multicriterio de toma de decisiones para ayudar a decidir a los bancos si deben unirse al proyecto.[CA] Investigadors, comunitat empresarial i classe política, destaquen que la inversió en energies renovables és un dels instruments més efectius per assolir els objectius de reducció de les emissions de CO2 establerts pel recent acord signat a la conferència de Paris (COP21) al desembre de 2015, mitjançant el qual, 195 països van adoptar el primer acord universal i jurídicament vinculant de la història. El problema del finançament dels projectes d'energia renovable (RE) s'ha convertit en un tema crucial per a qualsevol decisor públics i privats. Les limitacions pressupostàries dels governs i La falta de crèdit han provocat que es reconsiderin els instruments de finançament en el sector de les RE, per tant, la investigació en noves tècniques de finançament per als projectes de RE, com el Project Finance (PF) ha guanyat interès en els últims anys. PF és una tècnica que s'aplica en grans projectes d'inversió. Durant les últimes dècades del Segle XX, els nous esquemes de col-laboració publico-privades han permès portar a terme grans projectes d'infraestructures i de RE. En aquests sectors, el PF s'ha utilitzat per reduir costos, conflictes i gestionar millor els riscos. Existeixen nombroses contribucions científiques que subratllen la importància de la RE, però hi ha un buit en la investigació pel que fa als aspectes financers dels projectes de RE. Aquesta tesis té com a objectiu aportar diverses contribucions. En primer lloc, proporcionar una millor comprensió de la tècnica del PF i el seu ús en el sector de les RE. En segon lloc, cobrir el buit existent en la literatura sobre la investigació dels aspectes financers de les RE mitjançant la revisió de les contribucions sobre MCDM per a l'avaluació dels projectes de RE des del punt de vista de l'inversor. En tercer lloc, es proposa un model MPDM Moderate Pessimism Decision Making, que afegeix a l'avaluació financera racional d'oportunitats d'inversió, un conjunt de factors no financers que afecten les decisions dels inversors. Finalment, mitjançant un exemple il-lustratiu, s'aplica aquest model multicriteri de presa de decisions per ajudar a decidir als bancs si han de unir-se al projecte.Mayor Vitoria, F. (2016). Project Finance and MCDM financial models: An application in renewable energy projects [Tesis doctoral no publicada]. Universitat Politècnica de València. https://doi.org/10.4995/Thesis/10251/73067TESISCompendi

Study of ranking irregularities when evaluating alternatives by using some ELECTRE methods and a proposed new MCDM method based on regret and rejoicing

Multi-criteria decision-making (MCDM) is one of the most widely used decision methodologies in the sciences, business, and engineering worlds. MCDM methods aim at improving the quality of decisions by making the process more explicit, rational, and efficient. One intriguing problem is that oftentimes different methods may yield different answers to the same decision problem. Thus, the issue of evaluating the relative performance of different MCDM methods is raised. One evaluating procedure is to examine the stability of an MCDM method’s mathematical process by checking the validity of its proposed rankings. The ELECTRE II and III methods are two well-known MCDM methods and widely accepted in solving MCDM problems in civil and environmental engineering. However these two methods have never been studied in detail for the validity of their proposed rankings. Thus, the first aim of this thesis is to examine if these two methods suffer of any type of ranking irregularities and analyze the reasons of the phenomenon. As the research results in this thesis revealed, the ELECTRE II and III methods do allow some types of ranking irregularities to happen. For instance, these two methods might change the indication of the best alternative for a given MCDM problem when one of the non-optimal alternatives was replaced by a worse one. The two methods were also evaluated in terms of two other ranking tests and they failed them as well. Two real-life cases are described to demonstrate the occurrence of rank reversals. Then reasons behind the phenomenon are analyzed. Next an empirical study and some real-life case studies were executed and discussed. The results of these examinations show that the rates of those ranking irregularities were rather significant in both the simulated decision problems and the real-life cases studied in this research. However, some recent studies showed that rank reversals could also happen because people may reverse their preferences due to some emotional feelings, like regret and rejoicing. Thus this thesis proposes a new MCDM method which is based on regret and rejoicing. This new method is expected to satisfy a set of critical conditions

Assessment of Energy Systems Using Extended Fuzzy AHP, Fuzzy VIKOR, and TOPSIS Approaches to Manage Non-Cooperative Opinions

Energy systems planning commonly involves the study of supply and demand of power, forecasting the trends of parameters established on economics and technical criteria of models. Numerous measures are needed for the fulfillment of energy system assessment and the investment plans. The higher energy prices which call for diversification of energy systems and managing the resolution of conflicts are the results of high energy demand for growing economies. Due to some challenging problems of fossil fuels, energy production and distribution from alternative sources are getting more attention. This study aimed to reveal the most proper energy systems in Saudi Arabia for investment. Hence, integrated fuzzy AHP (Analytic Hierarchy Process), fuzzy VIKOR (Vlse Kriterijumska Optimizacija Kompromisno Resenje) and TOPSIS (Technique for Order Preferences by Similarity to Idle Solution) methodologies were employed to determine the most eligible energy systems for investment. Eight alternative energy systems were assessed against nine criteria—power generation capacity, efficiency, storability, safety, air pollution, being depletable, net present value, enhanced local economic development, and government support. Data were collected using the Delphi method, a team of three decision-makers (DMs) was established in a heterogeneous manner with the addition of nine domain experts to carry out the analysis. The fuzzy AHP approach was used for clarifying the weight of criteria and fuzzy VIKOR and TOPSIS were utilized for ordering the alternative energy systems according to their investment priority. On the other hand, sensitivity analysis was carried out to determine the priority of investment for energy systems and comparison of them using the weight of group utility and fuzzy DEA (Data Envelopment Analysis) approaches. The results and findings suggested that solar photovoltaic (PV) is the paramount renewable energy system for investment, according to both fuzzy VIKOR and fuzzy TOPSIS approaches. In this context our findings were compared with other works comprehensively.This research was funded by the Deanship of Scientific Research (DSR) at King Abdulaziz University, Jeddah, under grant no. (RG-7-135-38). The authors, therefore, acknowledge with thanks DSR technical and financial support

A multicriteria analysis of photovoltaic systems: Energetic, environmental, and economic assessments

The development of photovoltaic (PV) energy has led to rising efficiencies, better reliability, and falling prices. A multicriteria analysis (MCA) of PV systems is proposed in this paper in order to evaluate the sustainability of alternative projects. The investigations are presented using multiple indicators: Energy Payback Time (EPBT), Energy Return on Investment (EROI), Greenhouse Gas per kilowatt-hour (GHG/kWh), Greenhouse Gas Payback Time (GPBT), Greenhouse Gas Return on Investment (GROI), Net Present Value (NPV), Discounted Payback Time (DPBT), and Discounted Aggregate Cost Benefit (D(B/C) A). PV energy is a relevant player in global electricity market and can have a key-role in sustainable growth

Enhancing the ELECTRE decision support method with semantic data

Prendre una decisió quan les opcions es defineixen mitjançant un conjunt divers de criteris no és fàcil. Aqueta tesi es centra en ampliar la metodologia ELECTRE, que és el mètode del tipus "outranking" més utilitzat. En aquesta tesi ens centrem en problemes de decisió que involucren informació no numèrica, tal com els criteris semàntics multivaluats, que poden prendre com a valors els conceptes d'una ontologia de domini determinada. Primer proposo una nova manera de manipular els criteris semàntics per evitar l'agregació de les puntuacions numèriques abans del procediment de classificació. Aquest mètode, anomenat ELECTRE-SEM, segueix els mateixos principis que el clàssic ELECTRE però, en aquest cas, els índexs de concordança i discordança es defineixen en termes de la comparació per parelles de les puntuacions que indiquen l'interès de l'usuari sobre diferents conceptes de l'ontologia. En segon lloc, proposo crear un perfil d'usuari semàntic mitjançant el emmagatzemant de puntuacions de preferències a l'ontologia. Es vincula una puntuació d'interès numèrica als conceptes més específics, això permet distingir millor les preferències de l'usuari, i també s'incorpora un procediment d'agregació per inferir les preferències de l'usuari considerant les relacions taxonòmiques entre conceptes. La metodologia proposada s'ha aplicat en dos casos d’estudi: l'avaluació de plantes de generació d'energia i la recomanació d'activitats turístiques a Tarragona.Tomar una decisión cuando las opciones se definen sobre un conjunto diverso de criterios no es fácil. Esta tesis se centra en ampliar la metodología ELECTRE, que es el método del tipo "outranking" más utilizado. En esta tesis nos centramos en problemas de decisión que involucren información no numérica, tal como los criterios semánticos multi-valuados, que pueden tomar como valores los conceptos de una ontología de dominio determinada. Primero propongo una nueva forma de manejar los criterios semánticos para evitar la agregación de puntuaciones numéricas antes del procedimiento de clasificación. Este método, llamado ELECTRE-SEM, sigue los mismos principios que el clásico ELECTRE, pero en este caso los índices de concordancia y discordancia se definen en términos de la comparación por pares de unas puntuaciones que indican el interés del usuario sobre distintos conceptos de la ontología. En segundo lugar, propongo crear un perfil de usuario semántico mediante el almacenamiento de puntuaciones de preferencias en la ontología. Se asocian puntuaciones numéricas a los conceptos más específicos, lo cual permite distinguir mejor las preferencias del usuario, y se incorpora un proceso de agregación para inferir las preferencias del usuario mediante las relaciones taxonómicas entre conceptos. La metodología propuesta ha sido aplicada en dos casos de estudio: la evaluación de las plantas de generación de energía y la recomendación de actividades turísticas en Tarragona.Reach a decision when options are defined on a set of diverse criteria is not easy. This thesis is focused on improving the methodology ELECTRE, which is the most used outranking-based method. In this dissertation, we focus on decision problems involving non-numerical information, such as multi-valued semantic criteria, which may take as values the concepts of a given domain ontology. First, I propose a new way of handling semantic criteria to avoid the aggregation of the numerical scores before the ranking procedure. This method, called ELECTRE-SEM, follows the same principles than the classic ELECTRE but in this case the concordance and discordance indices are defined in terms of the pairwise comparison of the interest scores. Second, I also propose to create a semantic user profile by storing preference scores into the ontology. The numerical interest score attached to the most specific concepts permits to distinguish better the preferences of the user, improving the quality of the decision by the incorporation of an aggregation methodology to infer the user's preferences by considering taxonomic relations between concepts. The proposed methodology has been applied in two case studies: the assessment of power generation plants and the recommendation of touristic activities in Tarragona