Location Selection for a Company using Analytic Hierarchy Process

Abstract: Analytic hierarchy process (AHP)�developed by Prof. Thomas L. Saaty (1970s)�is a decision-making method for prioritizing alternatives when multiple criteria needs to be considered. It structures a problem as a hierarchy or a set of integrated levels. AHP is structured into three levels, i.e., goal, criteria, and alternatives. It does not require absolute judgment or assessment but helps us to make a relative assessment between two items at a time. AHP judgments are known as pairwise comparisons. It uses a weighted average approach idea, but it uses a method for assigning ratings and weights that are considered to be more reliable and consistent. A company wants to select a best location for building a new plant from a set of three locations for enlarging its operations. In order to assist such a company, we will be using AHP by taking into account four criteria such as property price, distance from suppliers, quality of labor pool, and labor cost. This study attempts to help the company in selecting the best location so that it can build its new plant and expand its operations by using the aforementioned criteria.

Keywords: Analytic hierarchy process, company, distance from suppliers, labor cost, location selection, multicriteria decision-making problem, property price, quality of labor pool.