Analytic Hierarchy Process in Multiple–Criteria Decision–Making: A Model Example

Abstract

Managers have to make decisions several times a day. The decision-making process can be defined as an essential activity realized by managers every day. Decisions can be implemented intuitively, or by using relevant decision-making methods. This depends on the nature of the decision, as well as the intensity of its possible future effects. The theory of decision-making can be defined as a relatively young discipline. It can be stated that decision-making is no longer an intuitive process. Most decision-making situations are of a multiple criteria character. In this contribution, the authors focus on multiple-criteria decision-making, to which several methods can be applied. In the practical part, the authors use Saaty's method, also known as the Analytic Hierarchy Process. Saaty is considered to be the most important researcher dealing with the issue of multiple-criteria decision-making. The set multiple-criteria decision-making problem was to choose one business partner out of eight under consideration. The decision-making criteria included selected financial indicators and non-financial criteria. The aim of the contribution is to use the Analytic Hierarchy Process to assess potential business partners and to select an optimal candidate.