Business Performance and Financial Institutions in Europe by Unknown

Business Performance and Financial Institutions in Europe by Unknown

Author:Unknown
Language: eng
Format: epub
ISBN: 9783030575175
Publisher: Springer International Publishing


(2)

Step 5. Determination of the amount of information Cj emitted by the jth criteria:

(3)

The higher value of Cj points to a greater amount of information contained in the given criterion and, consequently, to its greater relative significance.

Step 6. Determination of the criteria weight coefficients by applying the relation:

(4)

4.2 TOPSIS Method

The name TOPSIS represents the acronym of the Technique for Order of Preference by Similarity to Ideal Solution. It is a method of multi-criteria analysis developed by Hwang and Yoon in 1981 (Yoon and Hwang 1981).

The essence of this method is that the optimal solution should be closest to the positive-ideal solution, and furthest from the negative-ideal solution in the geometric sense (Todorović and Stanković 2011). In doing so, the ideal solution is the point where the utility for the decision-maker is greatest, that is, the point where the value of the revenue criteria is highest, while at the same time the value of the cost criteria is the lowest. The ideal solution is usually not feasible, but all methods of multi-criteria analysis tend to make the optimal solution as close as possible to the ideal one. Therefore, the optimal solution is the solution that meets most of the criteria.

The TOPSIS procedure can be represented by the following algorithm (Yoon and Hwang 1995):

Step 1. Determination of a normalized decision matrix with coefficients rij, where the coefficients are determined using the following relation:



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