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Application and Development of a Fuzzy Analytic Hierarchy Process within a Capital Investment Study


Author Info

  • Yu-Cheng Tang

    (Department of Accounting, National Changhua University of Education, Taiwan)

  • Malcolm J. Beynon

    (Accounting and Finance Section, Cardiff Business School, University of Wales Cardiff)

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    Capital budgeting as a decision process is among the most important of all management decisions. The importance (consequents) of the subsequent outcome may bring a level of uncertainty to the judgement-making process by the decision maker(s) in the form of doubt, hesitancy, and procrastination. This study considers one such problem, namely the selection of the type of fleet car to be adopted by a small car rental company, a selection that accounts for a large proportion of the company¡¦s working capital. With a number of criteria to consider, a fuzzy analytic hierarchy process (FAHP) analysis is undertaken to accommodate the inherent uncertainty. Developments are made to the FAHP method utilised to consider the preference results with differing levels of precision in the pairwise judgements made.

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    Bibliographic Info

    Article provided by College of Business, Feng Chia University, Taiwan in its journal Journal of Economics and Management.

    Volume (Year): 1 (2005)
    Issue (Month): 2 (July)
    Pages: 207-230

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    Handle: RePEc:jec:journl:v:1:y:2005:i:2:p:207-230

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    Related research

    Keywords: capital budgeting; degree of fuzziness; fuzzy analytic hierarchy process; sensitivity analysis; uncertainty;


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    1. Ahn, Byeong Seok, 2000. "The analytic hierarchy process in an uncertain environment: A simulation approach by Hauser and Tadikamalla (1996)," European Journal of Operational Research, Elsevier, vol. 124(1), pages 217-218, July.
    2. Chang, Da-Yong, 1996. "Applications of the extent analysis method on fuzzy AHP," European Journal of Operational Research, Elsevier, vol. 95(3), pages 649-655, December.
    3. Buckley, James J. & Feuring, Thomas & Hayashi, Yoichi, 2001. "Fuzzy hierarchical analysis revisited," European Journal of Operational Research, Elsevier, vol. 129(1), pages 48-64, February.
    4. Thomas L. Saaty, 1986. "Axiomatic Foundation of the Analytic Hierarchy Process," Management Science, INFORMS, vol. 32(7), pages 841-855, July.
    5. Cheng, Ching-Hsue & Lin, Yin, 2002. "Evaluating the best main battle tank using fuzzy decision theory with linguistic criteria evaluation," European Journal of Operational Research, Elsevier, vol. 142(1), pages 174-186, October.
    6. Sutardi & bector, C. R. & Goulter, Ian, 1995. "Multiobjective water resources investment planning under budgetary uncertainty and fuzzy environment," European Journal of Operational Research, Elsevier, vol. 82(3), pages 556-591, May.
    7. Zahir, Sajjad, 1999. "Geometry of decision making and the vector space formulation of the analytic hierarchy process," European Journal of Operational Research, Elsevier, vol. 112(2), pages 373-396, January.
    8. Beynon, Malcolm, 2002. "An analysis of distributions of priority values from alternative comparison scales within AHP," European Journal of Operational Research, Elsevier, vol. 140(1), pages 104-117, July.
    9. Zhu, Ke-Jun & Jing, Yu & Chang, Da-Yong, 1999. "A discussion on Extent Analysis Method and applications of fuzzy AHP," European Journal of Operational Research, Elsevier, vol. 116(2), pages 450-456, July.
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