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.
Read full abstract