1. 2. 3. 4. 5. 6. 7. 8. IDENTIFICATION of decision problem Form a HIERARCHY GOAL ON THE TOP (Fundamental Objective) DECOMPOSE into sub-goals FURTHER DECOMPOSITION as necessary IDENTIFY CRITERIA (attributes) to measure achievement of goals EVALUATION CALCULATING overall PRIORITY Numerical Representation  Relationship between two elements that share a common parent in the hierarchy  Comparisons ask 2 questions: – Which is more important with respect to the criterion? – How strongly?  Matrix shows results of all such comparisons  Typically uses a 1-9 scale  1 2 Equal Importance 3 4 5 6 7 8 9 Moderate Importance Strong Importance Very Strong Importance For compromises between the above Reciprocals of above In comparing elements i and j - if i is 3 compared to j - then j is 1/3 compared to i Extreme Importance A1 ... An A1 t1/t1 t1/t2 ... t1/tn A2 t2/t1 t2/t2 ... t2/tn ... ... ... ... tn/tn ... A2 ... An tn/t1 tn/t2    Decomposition of decision problem Comparative judgment of the elements Synthesis of the priorities Structure the decision problem in a hierarchy Comparison of the alternatives based one the criterion Synthesize the comparisons to get the priorities of the alternatives with respect to each criterion and the weights of each criterion with respect to the goal Local priorities are then multiplied by the weights of the respective criterion The results are summed up to produce the overall priority of each alternative Assessment/ Selection of PC Price Memory capacity PC 1 Software PC 2 Speed PC 3 Flexibility to external devices Form of technology transfer costs purchase of equipment restrictive clauses purchase of license investment capacity purchase of technological package joint venture