Question
Your task is to guide an office car purchase problem your boss has been struggling with (three possible alternatives need to be evaluated). The boss
Your task is to guide an office car purchase problem your boss has been struggling with (three possible alternatives need to be evaluated). The boss wants the decision based on price, fuel efficiency, prestige, and comfort. The seller of the car has only provided quantitative information on the price dimension and fuel efficiency dimension but not on the other two dimensions of interest, i.e., prestige and comfort. You remembered the approach called the Analytic Hierarchy Process (AHP) and thought you would give it a try. You felt that the approach would bring structure into decision problems involving several alternatives and decision attributes (characteristics) when informational uncertainty/complexity is involved and when you do not have enough quantitative information available. You, therefore, decided to apply AHP in evaluating the cars along the four characteristics/dimensions: price, fuel efficiency, prestige, and comfort.
In the first preparatory step, you have already obtained all quantitative information from the seller. The information regarding prestige and comfort was obtained by your colleagues from trade journals. You consulted with your procurement colleagues and let them evaluate how each alternative stacks up against the others for each evaluation criterion (you had them do the pairwise comparisons). The summary of this preparatory step is provided below.
Alternatives | Price ($) | Fuel efficiency mpg | Prestige |
Avalon | 15000 | 26 | Low |
Babylon | 18000 | 28 | Fair |
Carryon | 24000 | 20 | High |
While information for comparing the three alternatives was somewhat easy to obtain, the relative importance of the individual attributes for your organization was difficult to derive. Therefore, you asked your colleagues to have a meeting to make pairwise comparisons of the attributes and communicate the findings. The summary findings are as follows.
Pairwise comparison of attributes:
In terms of prestige, your colleagues have indicated to you that prestige is moderately preferred to fuel efficiency, moderately to strongly preferred to comfort, and very strongly preferred to cost. Further comfort is moderately to strongly preferred to both price and fuel efficiency. Lastly, fuel efficiency is equally to moderately preferred to price.
Based on this information, you have mapped out the following plan of action [these are also the deliverables for this assignment and they must be in an Excel spreadsheet. Make sure that all formulas are visible]:
1. Draw the decision hierarchy (diagram)
2. Evaluate the attributes and provide an assessment on the consistency of the statements (identify the statements that yield inconsistent results and explain why those are inconsistent)
3. Evaluate the suppliers against each attribute and provide an assessment of the consistency of the statements.
4. As a last step, you plan to put it all together and calculate the final weights for each alternative, providing guidance on which one should be chosen.
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