humans are much more capable of making relative rather than absolute judgments. You see, it, it, it’s, designed to reflect the way people actually think. Is that OK? You move through the hierarchy making judgments about one pair of choices at a time. Of the houses you’re considering, um, is cost more important than location or, say, one has a big kitchen but only two bedrooms. uh, judgments about two of these things at a time. And after you’ve determined all the criteria and subcriteria, ah, then you go back and you start making pairwise comparisons between them. So, so let’s say, under floor plan, ah, the subcriteria are you want a big kitchen, three bedrooms, a basement. Professor: Then you get down to the subcriteria under each of these three criteria. those might be our key criteria for choosing a house. So, so we have cost, location, floor plan. Um, how about floor plan?-The layout of the rooms. Location, I think, would typically be one in, in most of our models, and maybe one more. And they would be things like, uh, like the cost. And, um, under criteria I would list for me what were the important factors that will influence the decision. Professor: So now that you’ve established a goal, you establish your criteria. What would be your goal in trying to find a house? Well, ah, let's just say, make the best choice in, in buying a new house. I would have to determine the goal for the house-hunting effort, ah, choose the house that would be, uh. so uh, taking our example of buying a house. And then you break it down into smaller parts. Professor: You, you start with your main goal. It’s not a good example for a business class, necessarily, but it’ll certainly do for today. so um, let’s say, if I was trying to buy a house, a house is actually a pretty good example. I, I want you to understand the logic behind Analytic Hierarchy Process and the basic approach. The important thing that I want to talk about is not the mathematics of it so much as the concept.
Now, there’s some AHP software out there that lets you do the math, but I'm not gonna get into that level of detail now. Professor: Now, the first step is to develop a hierarchy by breaking the problem down into its components, and then prioritizing the components, as you’ll see. It's called AHP, or Analytic, ah, Analytic Hierarchy Process. ah, the technique we're gonna talk about is, uh, it’s a way to sort of structure that decision and arrive at a better decision. when you're in a decision-making process in a business situation, and you've got all the participants there sort of voicing opinions and negotiating, and there are lots of different factors to consider in your decision. Um, tonight we're gonna talk about one approach to structuring decision-making on a specific topic, sort of, of, oh. Professor: OK, ah, let's um, let's start. Narrator: Listen to part of a lecture in a business class. TOEFL iBT® Listening Transcript of Audio File