Abstract
In a complex business environment, the leadership team has to take certain decisions based on several criteria associated with the decision, some of which are quantifiable with real numbers while the remaining may be subjective or qualitative in nature, which may possibly be expressible linguistically or as a subjective comparison, though equally important for the final decision making. Such decision problems are called Multi-Criteria Decision Making (MCDM) problems. There are techniques available to deal with such problems by integrating all the criteria, quantitative or qualitative, in the decision algorithm and arriving at the most suitable alternatives among several choices available, through certain process steps. MCDM problems may be encountered in many areas of business like key project decisions, strategic decisions on inward and outward logistics, marketing decisions, process technology selection, supply chain decisions, marketing strategies, plant layout optimization etc. The major algorithms that can be conveniently applied to crack such decision problems are Analytic Hierarchy Process (AHP), Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) and Weighted Sum Method (WSM). This article will attempt to solve a site selection problem for a Greenfield integrated steel project, considering several key selection criteria and certain alternative locations. For performing this exercise, the article shall use TOPSIS as the algorithm.
Highlights
Projects are manifestation of decision requirement at every step it progresses beginning with investment decisions until project closure
Some of the criteria could be qualitative or intangible, not representable in real numbers. Such decision problems are known as Multi-Criteria Decision Making (MCDM) problems, which compares the degree of relevance of each criteria with respect to the each available alternative and aggregates such data to identify the best alternative [4]
In addition to the aforesaid strategic level decisions, several other key decisions can be conveniently optimized at the functional levels like - optimizing manufacturing process [8], vendor and contractor selection [9, 11, 12]. Most of such decisions involve several quantitative as well as qualitative criteria which need to participate in the decision algorithm to result in near-accurate decision options with preference ranking
Summary
Projects are manifestation of decision requirement at every step it progresses beginning with investment decisions until project closure Such decision problems can be of diverse nature and complexities with varying ramification on the project objectives and organisational strategies. Some of the criteria could be qualitative or intangible, not representable in real numbers Such decision problems are known as Multi-Criteria Decision Making (MCDM) problems, which compares the degree of relevance of each criteria with respect to the each available alternative and aggregates such data to identify the best alternative [4]. Method which identifies the alternative that is at closest geometrical (Euclidean) distance from the positive ideal solution (PIS) and farthest from the negative ideal solution. In this article we shall try to solve a MCDM problem for selecting most suitable plant location for a Greenfield project out of many possible locations based on five key criteria using TOPSIS [2]
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