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    The Analytic Hierarchy Process: Planning, Priority. Setting, Resource Allocation

    Uploaded by

    SyedFaridAli
    free for u

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    © All Rights Reserved
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    of 2

    Book Retriews

    cal, ethical and social factors. Furthermore, since


    risk is a basic attribute of R & D , they must be able
    to distinguish between right and wrong kinds of
    risk to take. But in their task they are not left to
    their own devices: a complete set of powerful
    techniques and systematic processes lies at their
    diposal. This book is a remarkably complete review of the state of the art. Fourteen contributions
    are included embracing the fields of R & D economics, innovation, communication, organization,
    forecasting, resource allocation, project selection
    and scheduling. Private and public sectors are
    widely considered and even the developing countries have not been forgotten.
    A good introduction (by B.V. Dean and J.D.
    Goldhar), an excellent preface (by J.J. Baruch) and
    clear conclusions (by J.D. Goldhar) form a suitable frame. Several critical issues recur throughout
    the book and the main gaps yet to be filled have
    been clearly recognized. The paramount importance of communication and the unavoidable need
    for coordination and mutual understanding between R& D and marketing have also been stressed
    (I shall never forget an R & D manager blaming an
    R & D strategic planner for being "too much
    marketing oriented"!). S.D. Deshmukh and S.D.
    Chikte point out that the project identification
    phase has only received moderate attention from
    R & D managers and that the existing models seem
    to concentrate on estimating only one single type
    of uncertainty/risk (technological, market, etc.).
    This is consistent with the fact that very often the
    human mind is not accustomed to multidimensional thinking and explains the preference for
    sensitivity analysis, net present value and scoring
    evaluation models over portfolio techniques. Portfolio decisionsmas indicated in the paper by E.P.
    Winkofsky, R.M. Mason and W.E. Souder--entail
    large organizational commitments, which can have
    either significant benefits or significant opportunity costs, depending on the correctness of the
    decision itself. Only the best projects and opportunities should be selected and funded in the best
    overall fashion, making use of the best information available and any delay in the decision necessarily implies an opportunity loss. The techniques
    of forecasting are described in detail in the paper
    by A.R. Fusfeld and F.C. Spital.
    Substantial changes in the economic environment since the mid-1970s have rendered inadequate many of the tools and methods used for

    97

    forecasting, planning and making strategy. Therefore, there is an urgent need for new approaches in
    these fields.
    The extensive bibliography including no less
    than 850 published works gives an excellent overview of the relevant literature up to 1976. This
    makes the volume a useful reference work for
    management scientists and students, Literature on
    strategic decisions fails to provide a sufficient understanding of how such decisions are made. The
    more recent years have not been covered adequately in this book. Simulation techniques, financial -itical mass and fuzzy sets are in general
    scarcely mentioned in the book. The description of
    R & D in the public sector corresponds essentially
    to the situation in the U.S.A. Wide use is made of
    the concept of uncertainty (fully random process),
    where in reality risk would be the correct word (in
    fact R & D parameters can be almost generally
    estimated and probability distributions can be
    given with the usual forecasting techniques).
    The unfavourable development of the economic
    situation engenders a growing demand for expenditure cuts. The need to adopt strategies for
    planned organizational decline calls for different
    managerial skills and different supporting tools
    from those needed in an era of growth, it is
    therefore likely that a completely new book of this
    kind will be issued in ten years from now. For the
    time being, this one can be warmly recommended.
    R.A.A. BOSCHI
    CIBA-GEIG Y Ltd.
    Basel, Switzerland

    Thomas L. SAATY

    The Analytic Hierarchy Process: Planning, Priority.


    Setting, Resource Allocation
    McGraw-Hill, New York, 1980, xiii + 287 pages,
    15.65
    This is an original, new style and different book
    to guide and force decision makers, planners,
    model builders to think better, broader and
    deeper. It is not a usual textbook; most of the
    content is completely new and developed by the
    author himself based on his own research work. To
    me, there are new approaches '~o handle processes
    of priority setting, model building, planning, con-

    98

    Book Reoiews

    trolling, resource allocating.


    At th:,s point, I want to introduce this book
    based on a new multi-dimensional analysis of the
    Decision Making Process, with the words of the
    authors:
    "This book offers a new logic for organizing complexity and
    measuring priorities. Unlike traditional logic, which is basically
    linear, the Analytic Hierarchy Process (AHP) allows one to
    achieve a powerful economy of thought by bringing all the
    factors together in a hierarchical decomposition of the system,
    with the objectives and functions represented in the higher
    levels and the structure represented in the lower levels.
    "'The AHP is being used widely in corporate planning, in
    the Government for resource allocation purposes, and more
    w'.'dc[y, ov~oaninternational scale in the developing countries to
    determine priorities for their transport, industrial and agricultural infrastructure, and to prioritize the natural resources
    for investment.
    "In this book we present a theory., whose application reduces the study of even formidably intricate systems to a
    sequence of pairwise comparisons of properly identified components.
    "'This theory had its beginnings in the fall of 1971 while I
    wa~ working on problems of contingency planning for the
    Department of Defense.
    "The application maturity of the theory, came with the
    Sudan Transport study in 1973. which I was directing.
    "The practice of decision-making is concerned with weighting alternatives, all of which fulfill a set of desired objectives.
    The problem is to choose that alternative which most strongly
    fulfills the entire set of objectives. We are interested in deriving
    numerical weights for alternatives with respect to sub-objectives
    and for sub-objective.~ with respect to higher order objectives.
    We would like these weights to be meaningful for allocating
    resources. Thus our process of weighting should produce weights
    or priorities that are estimates of an underiving ratio scale. At
    thc same time in ~ituations with phy.~ical interdependence
    among activities, high priority activities which depend on low
    priority ones must not inadvertently be short-changed by reducing the resource allocation to the low priority ones. That is
    why resource allocation must be made subject to interdependence constraints.
    "This book is intended for readers of diverse backgrounds
    and intentionally involves some repetition of ideas. It is not
    solely aimed at people doing research or colleagues who have

    lution, and other applications, 7--Positive reciprocal matrices and their eigenva!aes, 8--Priorities in
    systems with feedback, 9--Scaling and multicriterion methods. The book has also two appendices,
    !. Matrices and eigenvalues, 2. Some concepts
    from graph theory, together with an interesting
    References and Bibliography where nineteen are
    from the author, an author index, and subject
    index.
    The author has given another appendix giving
    the simplified definitions of basic terminology he
    used in his book. He mentions 206 authors in his
    book, from classical pioneers of OR to very new
    names. He lists 200 references. But I could see
    only two books in French. All others are in
    English. I could not understand why Dr. Saaty
    used two French books in linear algebra and matrix calculus but did not mention any other book
    or article in any other language in the main subjects of his book.
    I hope, in the near future~ Dr. Saaty may write
    another simplified book on the same topics for
    Decision Makers and Executives, which will not
    have such a mathematical background. But I found
    the book like a new space vehicle in our "thinking
    space" which will lead us to explore many unknown aspects of Decision Making, Planning, and
    Priority Setting Processes.
    I congratulate Dr. Saaty, and the Publisher for
    their contribution to System Sciences and Operational Re.search. I advice my colleagues, working
    in Universities, Research and Consulting Companies and in Executive Positions to read this book
    once. I am sure they will read it several times, as I
    did.

    llhami 1. 1(o4RA YA LCIN


    Technical University of Istanbul
    lstanbul, Turkey

    distinguished ~.hemselves in the area of measurement."

    The book is organized in two parts, mainly to


    separate the theoretical foundations from the applications as: part one, Analytic Hierarchy Process, and part two: Applications. Then the book is
    divided into nine sections as: 1--Hierarchies and
    priorities, 2 - - Instructive examples, 3 Foundations and extensions, 4--Hierarchies and
    priorities: A formal approach, 5--Prediction, dynamic priorities, input-output interdependence,
    and resource allocation, 6--Planning conflict reso-

    Harold E. FEARON, William A. RUCH, Patrick


    G. DEC,K.ER, Ross R. RECK, V,ncent G.
    REUTER and C. David WIETERS

    Fundamentals of Production/Operations Management


    West Publishing, St. Paul, 1979, xi + 171 pages,
    4.50
    As the authors state in the preface, this book is
    intended to be fi;stly a simple compact treatment

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