Engineering Decision Making and Risk Management

Chapter 3Multicriteria Decision Making

Learning Objectives:

After studying this chapter, the reader will be able to do the following:

1. Generate a Pugh matrix and use it to identify the best alternative (Section 3.1).
2. Use the AHP to identify the best alternative in an MCDM situation (Section 3.2).
3. Develop utility functions for attributes with justification (Section 3.3).
4. Construct a valid weighted linear additive utility function (Section 3.3).
5. Use MAUT to identify the best alternative in an MCDM situation (Section 3.3).
6. Analyze how the relative desirability of an alternative changes as the utility function changes (Section 3.3).
7. Use conjoint analysis to construct a preference function from data about the decision maker's choices (Section 3.4).
8. Explain how the “value of a statistical life” should be used in a decision-making situation (Section 3.5).
9. Identify compensating and noncompensating solutions with justification (Section 3.6).
10. Develop a valid objective function that corresponds to a decision maker's preferences for compensation (Section 3.6).

When a decision maker is concerned about multiple criteria, it may be difficult to determine directly a ranking over the alternatives that have been identified. Consider, for instance, the glass selection example introduced in Chapter 2. Three criteria (which we also call “attributes”) are important to Joe (the decision maker) in this context: the strength of the glass, the ease of installation, and the cost of the glass. ...