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Composite indicator development using utility function and fuzzy theory

Author

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  • S-K Lee

    (Kwangwoon University, Seoul, South Korea)

  • J-H Yu

    (Kwangwoon University, Seoul, South Korea)

Abstract

Construction companies use composite indicators (CIs) to evaluate their overall project performance. However, the conventional methodology of CIs development causes indiscrimination, relative calibration, and redundancy. To address these problems, we propose a novel methodology that uses fuzzy theories. The proposed methodology includes a utility function for normalizing, a fuzzy measure for weighting, and a fuzzy integral for aggregating. We conducted a case study to assess the quality of the proposed methodology versus the alternative methodologies on 25 real projects of a construction company. The result showed that the measurement reliability of the proposed normalization method (1.96) is greater than that of the two different normalization methods (10.44 and 2.8, respectively). In addition, the measurement accuracy of the proposed aggregation method is greater than those of the four different aggregation methods. Therefore, our proposed methodology can more consistently and accurately help evaluate the overall project performance or success.

Suggested Citation

  • S-K Lee & J-H Yu, 2013. "Composite indicator development using utility function and fuzzy theory," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 64(8), pages 1279-1290, August.
    • Handle: RePEc:pal:jorsoc:v:64:y:2013:i:8:p:1279-1290
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    Citations

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    Cited by:

    1. Koc, T. & Bozdag, E., 2017. "Measuring the degree of novelty of innovation based on Porter's value chain approach," European Journal of Operational Research, Elsevier, vol. 257(2), pages 559-567.
    2. Yelin Fu & Kong Xiangtianrui & Hao Luo & Lean Yu, 2020. "Constructing Composite Indicators with Collective Choice and Interval-Valued TOPSIS: The Case of Value Measure," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 152(1), pages 117-135, November.
    3. Tianjiao Wang & Yelin Fu, 2020. "Constructing Composite Indicators with Individual Judgements and Best–Worst Method: An Illustration of Value Measure," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 149(1), pages 1-14, May.

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