Selection of preferences for both criteria and choices is done via pair-wise comparison. According to AHP to make a rational decision you should build a model as shown on the figure below in which the goal rests on selection criteria which depend on choices.
Let me illustrate the AHP with the following example: Imagine you are deciding on a vacation spot out of 4 choices A,B,C,D (for instance SF, NY, Rome and Barcelona) and using three criteria 1,2,3 (for example cost, night life and sightseeing). The AHP was proposed by Thomas Saaty who developed it while at the US Disarment Agency and the Wharton School, UPenn.
The Analytic Hierarchy Process is a solution / theory that is part of the Operations Research - a branch of economics that attempts to apply modeling and statistics to decision selection and execution of decisions within the enterprise.
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