A classification approach based on the outranking model for multiple criteria ABC analysis

The multiple criteria ABC analysis is widely used in inventory management, and it can help organizations to assign inventory items into different classes with respect to several evaluation criteria. Many approaches have been proposed in the literature for addressing such a problem. However, most of these approaches are fully compensatory in multiple criteria aggregation. This means that an item scoring badly on one or more key criteria could be placed in good classes because these bad performances could be compensated by other criteria. Thus, it is necessary to consider the non-compensation in the multiple criteria ABC analysis. To the best of our knowledge, the ABC classification problem with non-compensation among criteria has not been studied sufficiently. We thus propose a new classification approach based on the outranking model to cope with such a problem in this paper. However, the relational nature of the outranking model makes the search for the optimal classification solution a complex combinatorial optimization problem. It is very time-consuming to solve such a problem using mathematical programming techniques when the inventory size is large. Therefore, we combine the clustering analysis and the simulated annealing algorithm to search for the optimal classification. The clustering analysis groups similar inventory items together and builds up the hierarchy of clusters of items. The simulated annealing algorithm searches for the optimal classification on different levels of the hierarchy. The proposed approach is illustrated by a practical example from a Chinese manufacturer. Furthermore, we validate the performance of the approach through experimental investigation on a large set of artificially generated data at the end of the paper.     

Quantitative Comparison of Approximate Solution Sets for Bi‐criteria Optimization Problems*

We present the Integrated Preference Functional (IPF) for comparing the quality of proposed sets of near‐pareto‐optimal solutions to bi‐criteria optimization problems. Evaluating the quality of such solution sets is one of the key issues in developing and comparing heuristics for multiple objective combinatorial optimization problems. The IPF is a set functional that, given a weight density function provided by a decision maker and a discrete set of solutions for a particular problem, assigns a numerical value to that solution set. This value can be used to compare the quality of different sets of solutions, and therefore provides a robust, quantitative approach for comparing different heuristic, a posteriori solution procedures for difficult multiple objective optimization problems. We provide specific examples of decision maker preference functions and illustrate the calculation of the resulting IPF for specific solution sets and a simple family of combined objectives.     

Evaluating the life cycle of a building: A multivariant and multiple criteria approach

This paper considers the application of methodology for the multivariant design and multiple criteria analysis of the life cycle of a building. The theoretical basis of the methodology is developed. A proposed methodology allows everyone (i.e. client, investor, contractor, etc.), who has to make the decisions, to design alternatives of the building life cycle and to evaluate its qualitative and quantitative aspects. This approach, in which various criteria can be employed, is intended to support the decision making on a building's life cycle selection and increase the efficiency of the resolution process. The procedure of the evaluating of a building's life cycle is discussed using an example.     

Stock screening with use of multiple criteria decision making and optimization

A new method for the stock ranking based on the multiple criterion decision making and optimization is proposed. Two general criteria are used in the analysis. The first of them is based on the financial indices and may be treated as the criterion of firm's “health” or its financial performance. The second one is the two-criteria performance of firm based on the stock prices. It represents the firm's market success. The method rests on the selection of the stocks with a great correlation of the firm's financial performance and its market success. The local criteria are built in the form of the membership function of corresponding fuzzy subsets. Two different strategies for stock ranking and three most popular methods for local criteria aggregation are compared. As the example the values of financial rations and prices from database comprising the data of 162 firms from subsector of the biotechnology of US economy were used. It is shown that the proposed method makes it possible to select a small group of “good” stocks characterized by a great coincidence of firm's financial performance and its market success. The method rejects from the consideration all the “unsafe” firms, i.e., such ones that their market success is based rather on the public relations, rumors and other rather unreliable information. The method is addressed to those who prefer to select for a portfolio only the firms which demonstrate the closeness of their overall financial performance in the past year and success in the Stock Exchange in the following year.     

An interactive decision support system for an aggregate production planning model based on multiple criteria mixed integer linear programming

In this paper, we present an aggregate production planning (APP) model applied to a Portuguese firm that produces construction materials. A multiple criteria mixed integer linear programming (MCMILP) model is developed with the following performance criteria: (1) maximize profit, (2) minimize late orders, and (3) minimize work force level changes. It includes certain operational features such as partial inflexibility of the work force, legal restrictions on workload, work force size (workers to be hired and downsized), workers in training, and production and inventory capacity. The purpose is to determine the number of workers for each worker type, the number of overtime hours, the inventory level for each product category, and the level of subcontracting in order to meet the forecasted demand for a planning period of 12 months. Additionally, a decision support system (DSS) based on the MCMILP model is proposed. It will help practitioners find the “best” solution for an APP problem without having to familiarize themselves with the mathematical complexities associated with the model. An example to illustrate the use of the DSS is also included.     

Multi-item production lot-size inventory model with varying order cost under a restriction: A geometric programming approach

In this paper we present a geometric programming approach for determining the inventory policy for multiple items having varying order cost, which is a continuous function of the order quantity, and a limit on the total average inventory of all items. Our model is a generalization of that of Gupta and Gupta for unrestricted single-item order quantity model with varying order cost and assumes the same order cost function. This cost function relates well to real-life situations since it increases as the order quantity increases and, at the same time, it is easy to handle when deducing previous work as special cases of our model since it is easily reducible to a constant. An example is solved to illustrate the method.     

Robust Ordinal Regression and Stochastic Multiobjective Acceptability Analysis in multiple criteria hierarchy process for the Choquet integral preference model

The paper deals with two important issues of Multiple Criteria Decision Aiding: interaction between criteria and hierarchical structure of criteria. To handle interactions, we apply the Choquet integral as a preference model, and to handle the hierarchy of criteria, we apply the recently proposed methodology called Multiple Criteria Hierarchy Process. In addition to dealing with the above issues, we suppose that the preference information provided by the Decision Maker is indirect and has the form of pairwise comparisons of criteria with respect to their importance and pairwise preference comparisons of some pairs of alternatives with respect to some criteria. In consequence, many instances of the Choquet integral are usually compatible with this preference information. These instances are identified and exploited by Robust Ordinal Regression and Stochastic Multiobjective Acceptability Analysis. To illustrate the whole approach, we show its application to a real world decision problem concerning the ranking of universities for a hypothetical Decision Maker.     

Multi-item EOQ inventory model with varying holding cost under two restrictions: A geometric programming approach

In this paper we provide a simple method to determine the inventory policy of multiple items having varying holding cost using a geometric programming approach. The varying holding cost is considered to be a continuous function of the order quantity. The EOQ inventory model with constant holding cost and the classical EOQ inventory model without constraints are derived.     

优化出口商品结构的非线性目标规划模型、算法及应用

本文讨论了出口商品结构优化的目标及对约束条件的确定,进而建立了优化出口商品结构非线性目标规划模型,提出了求解的近似规划法,并以中国为实例进行了求解和分析,得到了我国出口商品最优结构及一些有意义的建议。     

A successive approximation algorithm for the multiple knapsack problem

It is well-known that the multiple knapsack problem is NP-hard, and does not admit an FPTAS even for the case of two identical knapsacks. Whereas the 0-1 knapsack problem with only one knapsack has been intensively studied, and some effective exact or approximation algorithms exist. A natural approach for the multiple knapsack problem is to pack the knapsacks successively by using an effective algorithm for the 0-1 knapsack problem. This paper considers such an approximation algorithm that packs the knapsacks in the nondecreasing order of their capacities. We analyze this algorithm for 2 and 3 knapsack problems by the worst-case analysis method and give all their error bounds.     

An assessment of sustainable housing affordability using a multiple criteria decision making method

Housing affordability is a complex issue that must not only be assessed in terms economic viability. In order to increase quality of life and community sustainability the environmental and social sustainability of housing must also be taken into consideration.     

Constraint-based model for the cyclic multi-hoists scheduling problem

This article presents a method for the resolution of a material handling scheduling problem. The case studied is a real industrial problem. It consists of finding a cyclic schedule for hoist movements in a treatment surface shop. In this kind of facility, several hoists are used for all the handling operations and they have to share common zones. Then it is necessary to control that there is no collision. The mathematical formulation of the problem is based on a combination of disjunctive constraints. The constraints describe either movement schedule or collision avoidance. The resolution procedure presented identifies all the collision configurations and then uses a branch and bound-like algorithm to find the optimal solution of a given problem. The language chosen for our implementation is the constraint logic programming language: Prolog IV, which is able to solve constraints with rational variables. It actively uses the constraint propagation mechanism that can be found in several languages.     

Project risk management using multiple criteria decision-making technique and decision tree analysis: a case study of Indian oil refinery

This study proposes an integrated analytical framework for effective management of project risks using combined multiple criteria decision-making technique and decision tree analysis. First, a conceptual risk management model was developed through thorough literature review. The model was then applied through action research on a petroleum oil refinery construction project in the Central part of India in order to demonstrate its effectiveness. Oil refinery construction projects are risky because of technical complexity, resource unavailability, involvement of many stakeholders and strict environmental requirements. Although project risk management has been researched extensively, practical and easily adoptable framework is missing. In the proposed framework, risks are identified using cause and effect diagram, analysed using the analytic hierarchy process and responses are developed using the risk map. Additionally, decision tree analysis allows modelling various options for risk response development and optimises selection of risk mitigating strategy. The proposed risk management framework could be easily adopted and applied in any project and integrated with other project management knowledge areas.     

A Unique Solution for the Nucleolus in Accounting Allocations*

The nucleolus method has been suggested in the literature as a means for accounting decision makers to allocate joint costs in situations where entities share a common resource. The nucleolus has the advantage, vis-à-vis other methods, of maximizing the benefit to the least-well-off entity or groups of entities, and therefore reducing the possibility that one or more entities may desire to withdraw from the sharing arrangement. The nucleolus is basically a linear programming model. Because of its formulation, the nucleolus may yield multiple optimal solutions. No reformulation of the nucleolus seems to exist to overcome this problem The minimum total propensity to disrupt (MTPD) is suggested as an extension of the nucleolus to identify unique values for allocations with multiple solutions. The MTPD, while exhibiting deficiencies as a stand-alone method, is similar in overall objective to the nucleolus and its mathematical function possesses a unique minimum. It is therefore the logical method for identifying a unique nucleolus solution. The use of the MTPD extension is critically examined through a representative application.     

A Model for the Transportation of Hazardous Waste*

Many decision problems, such as the transportation of hazardous waste, can be modeled by networks. However, due to the imprecise nature of much of the information decision makers have available, it is sometimes difficult to determine a best approach to the problem. To alleviate this problem, a network model that combines both precise and imprecise information is presented for the transportation of hazardous waste. The properties of the network model are investigated and solution procedures are presented.     

A structured framework to understand CSR decision-making: A case study of multiple rationales

The organisational justifications made for CSR-related decisions and actions are examined over time using a structured framework premised on instrumental, political, integrative and ethical as well as first and second-order rationales. Using material from semi-structured interviews and drawing on documentary sources, we find that the decision-making processes underlying CSR-related initiatives were complex and multi-layered with varied patterns of motivation and justification that was modified over time. While an instrumental rationale was always apparent, political, integrative and ethical rationales were also important in the context of first and second-order rationales. The paper provides a framework to help understand the justification of CSR initiatives in a structured way and has implications for both theory and practice.     

A modified internal rate of return model for capital rationing in project selection

The ability of a company to finance viable projects depends on the availability of funds, and this too is a function of time, interest rate and risk factors among others. Factors such as these would lead to limited fund availability, which would necessitate capital rationing. Linear/integer programming and profitability index are often used to tackle this problem for optimal solution. A third approach utilizing a modified internal rate of return (IRR) is proposed. To overcome the difficulty usually encountered in calculating IRR, a small program coded in BASIC is presented. Even though discounting the cash outflows beyond the initial year should have been ideal in the linear programming formulation, this paper casts doubts as to the validity of the solution derived from it, as different discount rates seem to produce very conflicting results from the same set of investment options. This is also applicable to profitability index. While efforts are being made to correct these lapses, the modified IRR model has been found useful in arriving at an optimum solution both for the single-period as well as for the multi-stage situation.     

A critical survey on the status of multiple criteria decision making theory and practice

This paper seeks to review and to contrast the main streams of thought in Multiple Criteria Decision Making (MCDM) theory and practice, without attempting to review all MCDM methods in detail. The main purpose is to identify pitfalls in the usage of various approaches, and to suggest approaches which are most robustly and effectively useable, especially by the non-expert in MCDM methodology. Problem areas in MCDM still requiring further research are also discussed.     

Establishment of risk acceptance criteria using Life Quality Index: Application to the Indian context

The formulation of risk acceptance criteria may be coupled gainfully with a prediction of the of investment required to comply with it, an exercise which can benefit from the application of socioeconomic indicators. The Life Quality Index (LQI) is one such indicator which amalgamates human mortality and wealth creation and places an implicit economic value on reduction of life risk. While there have been a number of studies to demonstrate the application of LQI pertaining to various technological systems, the present work extends it to estimate the sectoral level investment needed to reduce public risks to within the As Low As Reasonably Predictable region for the chemical industry, with specific illustration of the methodology for India. The potential reduction in public individual risk is computed as a function of percentage increase in safety investment expressed as a fraction of the industry's contribution to the nation's GDP. In addition, using a new, more accurate expression, estimates of a related parameter, the implied cost of averting a fatality (ICAF), are obtained for a number of developed economies and India. The ICAF estimates show reasonable agreement with the value of statistical life (VSL), a parameter which is integral to cost-benefit analysis of safety and environmental regulations.