MCDM Introduction 08-01
- 2. Definition: Criterion A quality or attribute of an alternative that is related to its desirability. Criteria – plural of criterion
- 3. Definition: Alternative A potential course of action. This may be an item to be purchased, a group of items purchased, or a policy or management action.
- 4. Definition: Decision A commitment to a single course of action. Often, the commitment is an expenditure, or allocation of resources.
- 5. Single-Criterion Decision Problems Examples: Choose least-cost airline ticket All alternatives have same route, same schedule, same comfort, etc. Choose color of suit you like best All alternatives have same style, same price, same size
- 6. Multiple-Criteria Decision Problems Examples: Choose an airline ticket Alternatives have different routes, schedules, types of airplane, costs, etc. Choose a suit Alternatives have different styles, colors, and prices
- 7. Multiple-Criteria Decision Problems There is a choice – multiple alternatives are possible Alternatives differ in more than one criterion Usually, the criteria are “competing” – i.e. no single alternative is best in every criterion
- 8. Terminology MCDM (multiple-criteria decision-making) MODM (multi-objective decision-making) MODA (multi-objective decision analysis) MAVT (multi-attribute value theory) MAPT (multi-attribute preference theory) MAUT (multi-attribute utility theory) All address the problem of balancing multiple, competing criteria. In many ways, they are all similar.
- 9. Why do formal analysis? Because criteria are competing and trade-offs among the criteria are difficult.
- 10. Types of Multiple-Criteria Decision-Making Problems Mutually exclusive alternatives – choose exactly one option Portfolio selection – choose a set of options or projects, whose desirability must be evaluated together This type is more common
- 11. Mutually Exclusive Alternatives: Plutonium Disposal Problem : What to do with excess-weapons plutonium Issues of concern : Plutonium is highly radioactive and long-lived and poses health and environmental threat Terrorists could use plutonium to make weapons All alternatives are costly – some very costly Source: Butler, J.C., A.N. Chebeskov, J.S. Dyer, T. Edmunds, J. Jia, and V.I. Oussanov, “The United States and Russia Evaluate Plutonium Disposition Options with Multiattribute Utility Theory,” Interfaces , Volume 35, No. 1., January-February 2005, pp. 88-101.
- 12. Major Categories of Criteria
- 13. Mutually Exclusive Alternatives: Plutonium Disposal Alternatives : Use to make fuel for electric power plants (reactors) Immobilize in glass, ceramics, metal Permanent disposal underground There are multiple alternative ways to do each of the above – 13 alternatives total.
- 15. Why do formal analysis? Because multiple stakeholders have different values and judgments. Formal analysis improves communication and consensus.
- 16. Contexts for Multiple-Criteria Decision-Making Problems Single decision-maker – a single person has ultimate power to choose Group decision-maker – a single, identifiable, cooperative group has the decision-making authority Multiple stakeholders – multiple groups and individuals, who do not necessarily cooperate, are all affected by the decision, and ideally should all buy-in to final decision
- 17. Types of Multiple-Criteria Decision-Making Problems Mutually exclusive alternatives – choose exactly one option Portfolio selection – choose a set of selected options or projects, whose desirability must be evaluated together Design – choose characteristics of a design that are most desirable, constrained by feasible designs Measurement – assessing performance with many outputs/outcomes
- 18. Source: Army Doctrine Update #1, 24 February 2007
- 19. Full Spectrum Operations Offense Defense Stability Civil security; Civil control; Restore essential services; Support to governance; Support to economic and infrastructure development. Civil support Provide support in response to disaster; Support civil law enforcement;
- 20. Is Stability Ops a Portfolio Problem? What does it mean to provide stability? Is civil security more important than civil control? Civil security; Civil control; Restore essential services; Support to governance; Support to economic and infrastructure development.
- 21. Why MCDM Analysis? Criteria are competing and trade-offs are difficult to evaluate any other way. To balance multiple stakeholders’ values. To improve communication. Analysis provides justification for decisions, and improves chances of acceptance of result.
- 22. Why MCDM in Public Sector? In the private sector, the central decision-making criterion is to maximize profit. Unlike the private sector, the public sector has no single “bottom line”. Many stakeholders, and many values must be considered. Defining – and measuring – the benefit(s) of defense systems and policies is difficult!
- 23. There is no single right answer in MCDM analysis!!! Different decision-makers have different preferences – legitimately. Subjective assessments are usually required in MCDM analysis. In general – the results (selected alternatives) may not be highly sensitive to subjective assessments.
- 24. Themes of this Course Purpose of MCDM analysis Mechanics of MCDM analysis how to build a MCDM model, how it works, and how to use its results to make decisions Organizational considerations Organizational benefits and strategies in MCDM analysis