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Two ways to handle dependent uncertainties in multi-criteria decision problems

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  • Lahdelma, Risto
  • Makkonen, Simo
  • Salminen, Pekka

Abstract

We consider multi-criteria group decision-making problems, where the decision makers (DMs) want to identify their most preferred alternative(s) based on uncertain or inaccurate criteria measurements. In many real-life problems the uncertainties may be dependent. In this paper, we focus on multicriteria decision-making (MCDM) problems where the criteria and their uncertainties are computed using a stochastic simulation model. The model is based on decision variables and stochastic parameters with given distributions. The simulation model determines for the criteria a joint probability distribution, which quantifies the uncertainties and their dependencies. We present and compare two methods for treating the uncertainty and dependency information within the SMAA-2 multi-criteria decision aid method. The first method applies directly the discrete sample generated by the simulation model. The second method is based on using a multivariate Gaussian distribution. We demonstrate the methods using a decision support model for a retailer operating in the deregulated European electricity market.

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  • Lahdelma, Risto & Makkonen, Simo & Salminen, Pekka, 2009. "Two ways to handle dependent uncertainties in multi-criteria decision problems," Omega, Elsevier, vol. 37(1), pages 79-92, February.
  • Handle: RePEc:eee:jomega:v:37:y:2009:i:1:p:79-92
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    References listed on IDEAS

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    1. Lahdelma, Risto & Miettinen, Kaisa & Salminen, Pekka, 2003. "Ordinal criteria in stochastic multicriteria acceptability analysis (SMAA)," European Journal of Operational Research, Elsevier, vol. 147(1), pages 117-127, May.
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    5. Kangas, Annika S. & Kangas, Jyrki & Lahdelma, Risto & Salminen, Pekka, 2006. "Using SMAA-2 method with dependent uncertainties for strategic forest planning," Forest Policy and Economics, Elsevier, vol. 9(2), pages 113-125, November.
    6. Lahdelma, Risto & Hokkanen, Joonas & Salminen, Pekka, 1998. "SMAA - Stochastic multiobjective acceptability analysis," European Journal of Operational Research, Elsevier, vol. 106(1), pages 137-143, April.
    7. Lahdelma, Risto & Salminen, Pekka, 2002. "Pseudo-criteria versus linear utility function in stochastic multi-criteria acceptability analysis," European Journal of Operational Research, Elsevier, vol. 141(2), pages 454-469, September.
    8. Risto Lahdelma & Pekka Salminen, 2001. "SMAA-2: Stochastic Multicriteria Acceptability Analysis for Group Decision Making," Operations Research, INFORMS, vol. 49(3), pages 444-454, June.
    9. Canbolat, Yavuz Burak & Chelst, Kenneth & Garg, Nitin, 2007. "Combining decision tree and MAUT for selecting a country for a global manufacturing facility," Omega, Elsevier, vol. 35(3), pages 312-325, June.
    10. Lahdelma, Risto & Makkonen, Simo & Salminen, Pekka, 2006. "Multivariate Gaussian criteria in SMAA," European Journal of Operational Research, Elsevier, vol. 170(3), pages 957-970, May.
    11. Chiou, Hua-Kai & Tzeng, Gwo-Hshiung & Cheng, Ding-Chou, 2005. "Evaluating sustainable fishing development strategies using fuzzy MCDM approach," Omega, Elsevier, vol. 33(3), pages 223-234, June.
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    Cited by:

    1. Carpaneto, Enrico & Chicco, Gianfranco & Mancarella, Pierluigi & Russo, Angela, 2011. "Cogeneration planning under uncertainty: Part I: Multiple time frame approach," Applied Energy, Elsevier, vol. 88(4), pages 1059-1067, April.
    2. R. Pelissari & M. C. Oliveira & S. Ben Amor & A. Kandakoglu & A. L. Helleno, 2020. "SMAA methods and their applications: a literature review and future research directions," Annals of Operations Research, Springer, vol. 293(2), pages 433-493, October.
    3. Wang, Hai-Chao & Jiao, Wen-Ling & Lahdelma, Risto & Zou, Ping-Hua, 2011. "Techno-economic analysis of a coal-fired CHP based combined heating system with gas-fired boilers for peak load compensation," Energy Policy, Elsevier, vol. 39(12), pages 7950-7962.
    4. Giuseppe Pinto & Elnaz Abdollahi & Alfonso Capozzoli & Laura Savoldi & Risto Lahdelma, 2019. "Optimization and Multicriteria Evaluation of Carbon-neutral Technologies for District Heating," Energies, MDPI, vol. 12(9), pages 1-19, April.
    5. Jiménez, Antonio & Mateos, Alfonso & Sabio, Pilar, 2013. "Dominance intensity measure within fuzzy weight oriented MAUT: An application," Omega, Elsevier, vol. 41(2), pages 397-405.
    6. Jessop, Alan, 2014. "IMP: A decision aid for multiattribute evaluation using imprecise weight estimates," Omega, Elsevier, vol. 49(C), pages 18-29.
    7. Song, Lianlian & Fu, Yelin & Zhou, Peng & Lai, Kin Keung, 2017. "Measuring national energy performance via Energy Trilemma Index: A Stochastic Multicriteria Acceptability Analysis," Energy Economics, Elsevier, vol. 66(C), pages 313-319.
    8. Morais, Danielle C. & de Almeida, Adiel Teixeira, 2012. "Group decision making on water resources based on analysis of individual rankings," Omega, Elsevier, vol. 40(1), pages 42-52, January.
    9. Abdellah Menou & Risto Lahdelma & Pekka Salminen, 2022. "Multicriteria Decision Aiding for Planning Renewable Power Production at Moroccan Airports," Energies, MDPI, vol. 15(14), pages 1-20, July.
    10. Lahdelma, Risto & Salminen, Pekka, 2009. "Prospect theory and stochastic multicriteria acceptability analysis (SMAA)," Omega, Elsevier, vol. 37(5), pages 961-971, October.
    11. Wang, Guangchao & Jia, Ning & Ma, Shoufeng & Qi, Hang, 2014. "A rank-dependent bi-criterion equilibrium model for stochastic transportation environment," European Journal of Operational Research, Elsevier, vol. 235(3), pages 511-529.
    12. Silvia Angilella & Maria Rosaria Pappalardo, 2022. "Performance assessment of energy companies employing Hierarchy Stochastic Multi-Attribute Acceptability Analysis," Operational Research, Springer, vol. 22(1), pages 299-370, March.
    13. Jung, Nusrat & Moula, Munjur E. & Fang, Tingting & Hamdy, Mohamed & Lahdelma, Risto, 2016. "Social acceptance of renewable energy technologies for buildings in the Helsinki Metropolitan Area of Finland," Renewable Energy, Elsevier, vol. 99(C), pages 813-824.
    14. Dinçer, Hasan & Yüksel, Serhat, 2019. "An integrated stochastic fuzzy MCDM approach to the balanced scorecard-based service evaluation," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 166(C), pages 93-112.
    15. Menou, Abdellah & Benallou, Abdelhanine & Lahdelma, Risto & Salminen, Pekka, 2010. "Decision support for centralizing cargo at a Moroccan airport hub using stochastic multicriteria acceptability analysis," European Journal of Operational Research, Elsevier, vol. 204(3), pages 621-629, August.

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