A Handbook on Multi-Attribute Decision-Making Methods

6TOPSIS

6.1 Introduction

Based on the basic principle of multiattribute decision‐making (MADM), the decision‐maker can use the similarity between the feasible alternatives and the preferential result and/or incongruity of the alternatives to the undesirable outcome in decision‐making. The aforementioned notion is, chiefly, the core principle of the reference‐dependent theory (Kahneman and Tversky 1979). According to the reference‐dependent theory, the decision‐maker evaluates the feasible alternatives in terms of gains and losses relative to a predetermined subjective reference point(s) (Kahneman and Tversky 1984, 2000; Kahneman et al. 1991; Quattrone and Tversky 1988; Hardie et al. 1993; Highhouse and Johnson 1996). In the MADM viewpoint, these reference points are represented by the ideal and/or inferior alternatives (Tzeng and Huang 2011). Note that the definition of reference points, the similarity measurement techniques, and the computational assumptions are what distinguish the MADM methods that are established upon reference‐dependent theory.

The technique for order preferences by similarity to an ideal solution (TOPSIS) is an MADM solving method that is rooted in the basic principles of reference‐dependence theory. The pioneering implementation of TOPSIS as an MADM method can be traced back to Hwang and Yoon (1981). The method’s flourishment was largely indebted to the works of Yoon (1987), Chen and Hwang (1992), and Hwang et al. (1993). In essence, the TOPSIS method ...