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Application and Development of a Fuzzy Analytic Hierarchy Process within a Capital Investment Study

Yu-Cheng Tang and Malcolm J. Beynon
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Yu-Cheng Tang: Department of Accounting, National Changhua University of Education, Taiwan
Malcolm J. Beynon: Accounting and Finance Section, Cardiff Business School, University of Wales Cardiff

Journal of Economics and Management, 2005, vol. 1, issue 2, 207-230

Abstract: Capital budgeting as a decision process is among the most important of all management decisions. The importance (consequents) of the subsequent outcome may bring a level of uncertainty to the judgement-making process by the decision maker(s) in the form of doubt, hesitancy, and procrastination. This study considers one such problem, namely the selection of the type of fleet car to be adopted by a small car rental company, a selection that accounts for a large proportion of the company¡¦s working capital. With a number of criteria to consider, a fuzzy analytic hierarchy process (FAHP) analysis is undertaken to accommodate the inherent uncertainty. Developments are made to the FAHP method utilised to consider the preference results with differing levels of precision in the pairwise judgements made.

Keywords: capital budgeting; degree of fuzziness; fuzzy analytic hierarchy process; sensitivity analysis; uncertainty (search for similar items in EconPapers)
Date: 2005
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Handle: RePEc:jec:journl:v:1:y:2005:i:2:p:207-230