APPLICATION OF AHP AND PROMETHEE METHODS FOR RANKING THE PROFITABILITY OF INVESTMENT PROJECTS

Svetlana Tasić; Jelena Vukićević; Dragan Dimitrijević; Dejan Anđelković

doi:10.35120/sciencej0301025t

Authors

Svetlana Tasić Belgrade Academy of Business and Art Vocational Studies, Serbia
Jelena Vukićević Novi Sad School of Business, Serbia
Dragan Dimitrijević University Business Academy in Novi Sad, Faulty of Applied Sciences Niš, Serbia
Dejan Anđelković University Business Academy in Novi Sad, Faulty of Applied Sciences Niš, Serbia

DOI:

https://doi.org/10.35120/sciencej0301025t

Keywords:

AHP method, PROMETHEE method, project

Abstract

Making a decision about which project is the most profitable is not an easy task, especially when it comes
to investments that require large investments. In practice, there are a large number of methods that are applied in order to
make the right decision. The aim of this paper is to show, through empirical analysis, the application of AHP and PROMETHEE
methods as extremely effective when deciding on the best alternative location for the construction of a mini-hydroelectric power
plant. In order to demonstrate the application of these methods and the process of choosing the most profitable project, using
these methods, real data obtained by the investor, who has three alternative locations for the construction of a mini-hydroelectric
power plant, was used. First, an adequate discount factor, calculated net present value, Internal rate of RETURN project and
dynamic investment payback period were selected, in order to then apply the AHP calculation, and then the PROMETHEE
method in the Decision Lab 2000 program, based on all previously calculated indicators. The combination of these methods
showed which of the projects is the most profitable and which should be implemented. The very application of these methods
also showed us that several methods should be used before the final decision is made, in order to choose the most profitable
alternative for the investor.

Downloads

Download data is not yet available.

References

Anjasmoro, B., & Sangkawati, S. (2017). Priority Analysis of Small Dams Construction using Cluster Analysis, AHP and

Weighted Average Method Case Study: Small Dams in Semarang District. Procedia Engineering, 171, 1514-1525.

Brans, J.P., & Mareschal, B. (1994). The PROMCALC and GAIA decision support system for multicriteria decision aid. Decision DOI: https://doi.org/10.1016/0167-9236(94)90048-5

Support Systems, 12, 297–310.

Burke R. (1993). Project Managament: Planing and Control.John Wiley Songs.

Fatih S., İrfan K., Durmuş A. C. & Aziz G. (2020) Using AHP and PROMETHEE multi-criteria decision making methods to define

suitable apiary locations. Journal of Apicultural Research, 59(4), 546-557.

Goswami, S.S., & Behera, D.K. (2021). Evaluation of the best smartphone model in the market by integrating fuzzy-AHP and DOI: https://doi.org/10.1007/s40622-020-00260-8

PROMETHEE decision-making approach. Decision 48, 71–96.

Komchornrit, K. (2021). Financial Evaluation by the Combined AHP-PROMETHEE Method: A Case Study of Integrated

Logistics Service Providers in Thailand. Journal of Community Development Research, 14(2), 77-89.

Lee, W.B., Lau, H., Liu, Z., & Tam, S. (2001). A fuzzy analytical hierarchy process approach in modular product design. Expert DOI: https://doi.org/10.1111/1468-0394.00153

System,18 (1), 32-42.

Macharis, C., Springeal, J., De Brucker, K., & Verbeke, A. (2004). PROMETHEE and AHP: The design of operational synergies

in multicriteria analysis. Strengthening PROMETHEE with ideas of AHP. European Journal of Operational Research, 153 (2), 307-317.

Nikouei, M. A., Oroujzadeh, M., & Mehdipour-Ataei, S. (2017). The PROMETHEE multiple criteria decision making analysis

for selecting the best membrane prepared from sulfonated poly (ether ketone) s and poly (ether sulfone) s for proton

exchange membrane fuel cell. Energy, 119, 77-85.

Özdemir, A., Özkan, A., Günkaya, Z. et al. (2020). Decision-making for the selection of different leachate treatment/management DOI: https://doi.org/10.1007/s11356-020-08524-7

methods: the ANP and PROMETHEE approaches. Environ Sci Pollut. 27, 19798–19809.

Prascevic, N., & Prascevic, Z. (2017). Application of fuzzy AHP for ranking and selection of alternatives in construction project DOI: https://doi.org/10.3846/13923730.2017.1388278

management.. J Civil Eng Management. 23(8),1123–1135.

Saaty, T.L. (1980). The Analytical Hierarchy Process. McGraw-Hill. DOI: https://doi.org/10.21236/ADA214804