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Geoff Coyle: Practical Strategy. Open Access Material. AHP
THE ANALYTIC HIERARCHY PROCESS (AHP)
INTRODUCTION
The Analytic Hierarchy Process (AHP) is due to Saaty (1980) and is often referred to,
eponymously, as the Saaty method. It is popular and widely used, especially in military
analysis, though it is not, by any stretch of the imagination, restricted to military
problems. In fact, in his book, (which is not for the mathematically faint of heart!) Saaty
describes case applications ranging from the choice of a school for his son, through to
the planning of transportation systems for the Sudan. There is much more to the AHP
than we have space for but we will cover the most easily used aspects of it.
The AHP deals with problems of the following type.
A firm wishes to buy one new piece of equipment of a certain type and has four aspects
in mind which will govern its purchasing choice: expense, E; operability, O; reliability,
R; and adaptability for other uses, or flexibility, F. Competing manufacturers of that
equipment have offered three options, X, Y and Z. The firm’s engineers have looked at
these options and decided that X is cheap and easy to operate but is not very reliable and
could not easily be adapted to other uses. Y is somewhat more expensive, is reasonably
easy to operate, is very reliable but not very adaptable. Finally, Z is very expensive, not
easy to operate, is a little less reliable than Y but is claimed by the manufacturer to have
a wide range of alternative uses. (This is obviously a hypothetical example and, to
understand Saaty properly, you should think of another case from your own
experience.)
Each of X, Y and Z will satisfy the firm’s requirements to differing extents so which,
overall, best meets this firm’s needs?
This is clearly an important and common class of problem and the AHP has numerous
applications but also some limitations which wil
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