Question 5 – AHP

You have decided it is time to invest in a cottage and have narrowed your search down to three alternatives. Cottage A is a 3-hour drive from home, has average quality swimming, and should be relatively low maintenance (about $500 per summer). Cottage B is a 5-hour drive from home, has good quality swimming but will require a little more maintenance (about $725 per summer). Cottage C is a four-hour drive from home has great water for swimming but is a little heavy on the maintenance ($1250) per summer.

a) Using travel time (quantitative), maintenance cost (quantitative) and swimming quality (qualitative) as your three decision criteria, complete an AHP analysis to select the best cottage: A, B or C. Be sure to complete all consistency ratio (CR) calculations and make adjustments if necessary. Note how much easier it is to be consistent with quantitative criteria. Consider a CR less than 0.10 to be sufficiently consistent.

b) Once this analysis is complete, make a value assessment by dividing the AHP score for each cottage by its price. Would this influence your decision or would you still prefer the cottage selected in part a. ?

Purchase price data for part b): A - $200,000, B - $175,000, C - $350,000