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The SUPER DECISIONS Software
The Analytic Network Process for decision making with
             dependence and feedback




                By Creative Decisions Foundation
                    4922 Ellsworth Avenue
                    Pittsburgh, PA 15213
                    Phone: 412-621-6546
                    Fax: 412-681-4510            1
The Parts of a Complex ANP Model
  with Benefits, Opportunities, Costs
               and Risks
• Top level network with the merit nodes:
  benefits, opportunities, costs and risks
• Subnets (4) beneath each merit node containing
  control criteria hierarchies for each merit
• Subnets for each of the high priority control
  criteria. There may be as many as 10 or 12 of
  these.
                                     2
Concepts Important in the ANP
1. Benefits, Opportunities, Costs and Risks
   (the merits of the decision)
2. Control Criteria Hierarchies (for each
   merit)
3. Decision subnets containing the
   alternatives for the high priority control
   criteria
4. Strategic Criteria introduced at the end of
                                   3
   the process to prioritize the BOCR nodes
Benefits, Opportunities, Costs and
   Risks Top-level Network




                           4
Hierarchy of Control Criteria for each
               Merit Node
• Create or access the subnet of a merit node by
right-clicking it to select Make/Show Subnet
•Control criteria subnets have a goal cluster
with a goal node, a criteria cluster with criteria
nodes and perhaps subcriteria in other clusters.
•The criteria are connected to the goal (and
subcriteria to criteria)
• Pairwise compare criteria and subcriteria, pick
high priority control criteria and build decision
                                    5
subnets for them
Benefits Control Hierarchy Subnet




          .8333       .1667



                              6
Opportunities Control Hierarchy




           .25       .75




                           7
Costs Control Hierarchy




   .8333       .1667




                       8
Risks Control Hierarch




     .75       .25




                     9
There is a Decision Subnet for each
Benefit Control Criterion; the one for
Economic Benefits is shown below




                             10
Perform all Pairwise Comparisons, e.g.: What is most
 important Operational Criterion for “Outsource All
         Application Development Work”




                                      11
Results of all pairwise comparisons are
arranged in unweighted supermatrix




                                  12
Pairwise compare the clusters connected
from a cluster for influence on that cluster.




                                 13
Multiply values in Unweighted SuperMatrix Components by corresponding Cluster Matrix Value
to get Weighted Supermatrix.
Example: All 9 numbers in (Financial, Alternatives) component of unweighted supermatrix are
multiplied by .833 from (Financial,Alternatives) cell in the Cluster matrix to yield values in
(Financial, Alternatives) component in weighted supermatrix below.
All columns then sum to 1 in weighted supermatrix.




                                                                    14
                      =1
The Weighted Supermatrix converges to the Limit
Supermatrix
All columns may be the same in the limit matrix, although not always the case.
Synthesized results for alternatives come from raw values in limit supermatrix




                                                             15
Synthesized results in Economic
        Benefits Decision Subnet
Alternatives under Economic Benefits      Ideals   Normals    Raw
1 Outsource all application development
   work                                   1.0000   0.6962    0.3427
2 Outsource the design and
   programming phases                     0.2766   0.1926    0.0948
3 Do not outsource any application
   development work                       0.1597   0.1112    0.0548




                                                      16
Synthesized results in Technological

           Benefits Decision Subnet
Alternatives under Technological
    Benefits                              Ideals   Normal    Raw
1 Outsource all application development
   work                                   1.0000   0.4411   0.2189
2 Outsource the design and
   programming phases                     1.0000   0.4411   0.2189
3 Do not outsource any application
   development work                       0.2669   0.1178   0.0584




                                                      17
Combining Economic and
Technological to get overall Benefits

Weight Economic by .833 and Technological
        by .167 and add to obtain:
Alternatives under Benefits Overall       Ideals   Normals    Raw

1 Outsource all application development
   work                                   1.0000   0.6350    1.0000

2 Outsource the design and
   programming phases                     0.3972   0.2522    0.3972

3 Do not outsource any application
   development work                       0.1776   0.1128    0.1776




                                                      18
Results under Benefits,
        Opportunities, Costs and Risks
                                              Positive               Negative
                                          Benefits   Oppor.        Costs    Risks

Alternatives                               Ideals    Ideals        Ideals   Ideals
1 Outsource all application development
   work                                   1.0000     1.0000        0.8518   1.0000
2 Outsource the design and
   programming phases                     0.3972     0.8277        0.7653   1.0000
3 Do not outsource any application
   development work                       0.1776     0.4908        1.0000   0.3570


                                                              19
Weight the BOCR by rating the top
alternative for each merit against the
          Strategic Criteria




                             20
Rating the BOCR
What is the highest valued alternative for Benefits? To determine what
it is synthesize in the Benefits control subnet which will rank the
Alternatives under Benefits. Keep that highest alternative in mind and
perform ratings across the Benefits row as to how it impacts the
strategic criteria. Repeat across the Opportunities row for
Opportunities’ highest valued alternative…and so on. For Costs and
Risks the highest valued alternative will be the worst one so you will be
rating by asking the question “How does this worst alternative for Costs
(Risks) impact the strategic criteria?”




                                                      21
Final Step is to Combine the BOCR
          Using a Formula

1. Additive negative formula – generally best for
   long term results: bB+oO-cC-rR
2. Multiplicative formula – equivalent to
   marginal cost/benefit analysis and generally
   best for short term results: BO/CR


                                   22
Combine BOCR results using Additive (negative)
          formula: bB+oO-cC-rR




                                   23
To change formula use the Design >
        Formula command




                           24
This is the Additive (negative) formula
      as the software expresses it




                            25
Combine BOCR results using Multiplicative
          formula: BO/CR




                                  26
When to use what formula
• Additive (negative) gives best alternative for the
  long-term
• Multiplicative gives the best alternative for the
  short-term
• In practice one usually looks at both. Often they
  give the same best alternative, but not always.
• Not possible to do sensitivity for multiplicative
  formula as the b,o,c and r cancel out.

                                         27
Performing Sensitivity on the
            BOCR Nodes
• Select the Additive (negative) formula using the
  Design>Sensitivity command
• Select Computations>Sensitivity
• Select Edit>Independent Variable (the initial
  graph is usually not the one you want – because
  the software starts with the first node in
  alphabetical order as the independent variable).
  You need to select the correct Independent
  Variable (to do sensitivity for the Risks, for
  example, choose Risks)
                                        28
Set the Sensitivity Parameters
•   Click on the node “Priority: 1 Availability of …” to select it, then
    select Edit to get to the Edit Parameter dialogue box. Change the Wrt
    Node to Risks.




                                                         29
Parameter Settings for Risks Sensitivity
  • In the Edit Parameter dialogue box set the Parameter Type to 0 for
    priorities and the Network to 0 for the top-level network (it is the
    bottom position as shown below – there is no name on it) and select
    Risks for the Wrt (with respect to) Node.




                                                            30
Display the Sensitivity Graph
• Click the Done button then the Update button to display
  the graph shown below
• As the priority of Risk increases above about 40% the best
  option changes from Outsource All to Do Not Outsource




The “with
respect to”
variable is
shown at the
bottom

                                               31
Investigate Sensitivity for the other
nodes: Benefits and Costs shown below
 Benefits              Costs




                               32

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BOCR multi level ANP models

  • 1. The SUPER DECISIONS Software The Analytic Network Process for decision making with dependence and feedback By Creative Decisions Foundation 4922 Ellsworth Avenue Pittsburgh, PA 15213 Phone: 412-621-6546 Fax: 412-681-4510 1
  • 2. The Parts of a Complex ANP Model with Benefits, Opportunities, Costs and Risks • Top level network with the merit nodes: benefits, opportunities, costs and risks • Subnets (4) beneath each merit node containing control criteria hierarchies for each merit • Subnets for each of the high priority control criteria. There may be as many as 10 or 12 of these. 2
  • 3. Concepts Important in the ANP 1. Benefits, Opportunities, Costs and Risks (the merits of the decision) 2. Control Criteria Hierarchies (for each merit) 3. Decision subnets containing the alternatives for the high priority control criteria 4. Strategic Criteria introduced at the end of 3 the process to prioritize the BOCR nodes
  • 4. Benefits, Opportunities, Costs and Risks Top-level Network 4
  • 5. Hierarchy of Control Criteria for each Merit Node • Create or access the subnet of a merit node by right-clicking it to select Make/Show Subnet •Control criteria subnets have a goal cluster with a goal node, a criteria cluster with criteria nodes and perhaps subcriteria in other clusters. •The criteria are connected to the goal (and subcriteria to criteria) • Pairwise compare criteria and subcriteria, pick high priority control criteria and build decision 5 subnets for them
  • 6. Benefits Control Hierarchy Subnet .8333 .1667 6
  • 8. Costs Control Hierarchy .8333 .1667 8
  • 10. There is a Decision Subnet for each Benefit Control Criterion; the one for Economic Benefits is shown below 10
  • 11. Perform all Pairwise Comparisons, e.g.: What is most important Operational Criterion for “Outsource All Application Development Work” 11
  • 12. Results of all pairwise comparisons are arranged in unweighted supermatrix 12
  • 13. Pairwise compare the clusters connected from a cluster for influence on that cluster. 13
  • 14. Multiply values in Unweighted SuperMatrix Components by corresponding Cluster Matrix Value to get Weighted Supermatrix. Example: All 9 numbers in (Financial, Alternatives) component of unweighted supermatrix are multiplied by .833 from (Financial,Alternatives) cell in the Cluster matrix to yield values in (Financial, Alternatives) component in weighted supermatrix below. All columns then sum to 1 in weighted supermatrix. 14 =1
  • 15. The Weighted Supermatrix converges to the Limit Supermatrix All columns may be the same in the limit matrix, although not always the case. Synthesized results for alternatives come from raw values in limit supermatrix 15
  • 16. Synthesized results in Economic Benefits Decision Subnet Alternatives under Economic Benefits Ideals Normals Raw 1 Outsource all application development work 1.0000 0.6962 0.3427 2 Outsource the design and programming phases 0.2766 0.1926 0.0948 3 Do not outsource any application development work 0.1597 0.1112 0.0548 16
  • 17. Synthesized results in Technological Benefits Decision Subnet Alternatives under Technological Benefits Ideals Normal Raw 1 Outsource all application development work 1.0000 0.4411 0.2189 2 Outsource the design and programming phases 1.0000 0.4411 0.2189 3 Do not outsource any application development work 0.2669 0.1178 0.0584 17
  • 18. Combining Economic and Technological to get overall Benefits Weight Economic by .833 and Technological by .167 and add to obtain: Alternatives under Benefits Overall Ideals Normals Raw 1 Outsource all application development work 1.0000 0.6350 1.0000 2 Outsource the design and programming phases 0.3972 0.2522 0.3972 3 Do not outsource any application development work 0.1776 0.1128 0.1776 18
  • 19. Results under Benefits, Opportunities, Costs and Risks Positive Negative Benefits Oppor. Costs Risks Alternatives Ideals Ideals Ideals Ideals 1 Outsource all application development work 1.0000 1.0000 0.8518 1.0000 2 Outsource the design and programming phases 0.3972 0.8277 0.7653 1.0000 3 Do not outsource any application development work 0.1776 0.4908 1.0000 0.3570 19
  • 20. Weight the BOCR by rating the top alternative for each merit against the Strategic Criteria 20
  • 21. Rating the BOCR What is the highest valued alternative for Benefits? To determine what it is synthesize in the Benefits control subnet which will rank the Alternatives under Benefits. Keep that highest alternative in mind and perform ratings across the Benefits row as to how it impacts the strategic criteria. Repeat across the Opportunities row for Opportunities’ highest valued alternative…and so on. For Costs and Risks the highest valued alternative will be the worst one so you will be rating by asking the question “How does this worst alternative for Costs (Risks) impact the strategic criteria?” 21
  • 22. Final Step is to Combine the BOCR Using a Formula 1. Additive negative formula – generally best for long term results: bB+oO-cC-rR 2. Multiplicative formula – equivalent to marginal cost/benefit analysis and generally best for short term results: BO/CR 22
  • 23. Combine BOCR results using Additive (negative) formula: bB+oO-cC-rR 23
  • 24. To change formula use the Design > Formula command 24
  • 25. This is the Additive (negative) formula as the software expresses it 25
  • 26. Combine BOCR results using Multiplicative formula: BO/CR 26
  • 27. When to use what formula • Additive (negative) gives best alternative for the long-term • Multiplicative gives the best alternative for the short-term • In practice one usually looks at both. Often they give the same best alternative, but not always. • Not possible to do sensitivity for multiplicative formula as the b,o,c and r cancel out. 27
  • 28. Performing Sensitivity on the BOCR Nodes • Select the Additive (negative) formula using the Design>Sensitivity command • Select Computations>Sensitivity • Select Edit>Independent Variable (the initial graph is usually not the one you want – because the software starts with the first node in alphabetical order as the independent variable). You need to select the correct Independent Variable (to do sensitivity for the Risks, for example, choose Risks) 28
  • 29. Set the Sensitivity Parameters • Click on the node “Priority: 1 Availability of …” to select it, then select Edit to get to the Edit Parameter dialogue box. Change the Wrt Node to Risks. 29
  • 30. Parameter Settings for Risks Sensitivity • In the Edit Parameter dialogue box set the Parameter Type to 0 for priorities and the Network to 0 for the top-level network (it is the bottom position as shown below – there is no name on it) and select Risks for the Wrt (with respect to) Node. 30
  • 31. Display the Sensitivity Graph • Click the Done button then the Update button to display the graph shown below • As the priority of Risk increases above about 40% the best option changes from Outsource All to Do Not Outsource The “with respect to” variable is shown at the bottom 31
  • 32. Investigate Sensitivity for the other nodes: Benefits and Costs shown below Benefits Costs 32