Absolute and Relative Evaluation of Socio-Economic Objects Based on Multiple Criteria Decision Making Methods
Keywords:MCDM, TOPSIS, Financial Stability, Absolute Evaluation, Relative Evaluation, Commercial Banks
AbstractThe multiple criteria decision making (MCDM) methodology implies relative quantitative evaluation of several compared alternatives relative to the chosen objective of evaluation. There is a compulsory requirement for making an evaluation applying such methods: availability of other alternatives for making a comparison. Nevertheless, frequently other alternatives are not available when the evaluated object is unique, and no analogous objects are present. In such cases the use of MCDM methods is not possible. The new proposed in this paper methodology of the absolute evaluation allows evaluating unique objects and processes, thus providing new possibilities for application known MCDA methods. For example, the evaluation of the dynamics of attractiveness based on the absolute evaluation can be more useful than the relative one as the comparison is being made with invariable objects rather than with the ones which can substantially change over time. In addition, the absolute evaluation is the only possible solution in such cases, when other objects for comparison are not available. The presented in the paper approach therefore provides a wider range of possible solutions for a decision-maker. In the proposed methodology the method TOPSIS was used as the most appropriate MCDM method for such evaluations. Proves of distinct features of the method are provided. The results of the absolute MCDM evaluation are compared with the results of the relative MCDM evaluation.
ECONOMICS OF ENGINEERING DECISIONS