Multiplicative aggregation in managerial multi-attribute decision making

Maksim Goman and Stefan Koch

International Journal of Multicriteria Decision Making, 2021, vol. 8, issue 3, 233-255

Abstract: This paper focuses on aggregated performance of alternatives for management decision making. Assuming non-comparable criteria, we propose a composite indicator (CI) based on weighted product instead of commonly applied weighted average (WA). We extensively compare WA and CI in a real-world example of strategic decision making problem regarding enterprise resource planning system upgrade. The CI shows robustness to data scale change. User preference for a decision support method was examined based on complexity perception and willingness to use. The users are more likely to understand simple methods and apply them rather than methods that they do not comprehend, and the proposed approach is rated 'statistically not worse' than WA in this regard. Our findings should help managers in practical multi-attribute problems where alternative ranking based on a number of non-comparable properties is required. The alternative's rank is obtained in a mathematically correct way, and the aggregation does not need data normalisation.

Keywords: multi-attribute decision making; MADM; strategic decision making; software selection. (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijmcdm:v:8:y:2021:i:3:p:233-255

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