Abstract
Multiple Criteria Decision Aid methods are increasingly used in financial decision making in order to capture the multifaceted character of modern enterprises activated in a complex and versatile market environment. This paper presents a multicriteria approach for the selection of firms applying for financial support from public funds. Besides the budget constraint, the specific decision situation imposes the consideration of additional policy constraints that prevent from directly exploiting rankings provided by a multicriteria method. In such a case the problem solution is to find a set of alternatives satisfying the constraints and at the same time maximising a measure of global performance. The proposed procedure relies on the PROMETHEE V method which belongs to the well-known PROMETHEE family of outranking methods and is capable to effectively deal with the problem’s multicriteria and combinatorial character. This method is modified in order to avoid any bias in the selection of the optimal set that may arrive because of the apparent contradiction between the rate of resources consumption and the coefficients of the alternatives in the additive objective function. The proposed modification results in a fractional objective function which is linearised by means of a suitable mathematical transformation.
Similar content being viewed by others
References
Abu-Taleb, M. and Marescal, B. (1995). Water resources planning in the Middle East: application of the PROMETHEE V multicriterion method. European Journal of Operational Research vol. 81, 500–511.
Brans, J. P. and Vincke, Ph. (1985). PROMETHEE. A new family of outranking methods in MCDM“, Management Science, vol 31 (6), 647–656.
Brans, J.P., Vincke, Ph. and Mareschal, B. (1986). How to select and how to rank projects: the PROMETHEE Method. European Journal of Operational Research vol. 24, 228–238.
Brans, J. P. and Mareschal, B. (1990). The PROMETHEE methods for MCDM: The PROMCALC, GAIA and BANKADVISER software“, in: C. A. Bana e Costa (ed.), Readings in Multiple Criteria Decision Aid, Springer-Verlag, Berlin, 216–252.
Brooke, A., Kendrick, D. and Meeraus, A. (1988). GAMS: A User’s Guide. San Francisco: The Scientific Press.
Charnes, A., and Cooper, W.W. (1962). Programming with linear fractional functionals. Naval Research Logistics Quarterly vol. 9, 181–186.
Cook, W.D. and Green, R.H. (2000). Project prioritisation: a resource-constrained data envelopment analysis approach. Soeio-Economic Planning Sciences vol. 34, 85–99
Roy, B. (1996). Multicriteria methodology for decision aiding. Nonconvex optimization and its applications. Kluwer Academic Publishers.
Williams, H.P. (1985). Model Building in Mathematical Programming. John Wiley & Sons.
Wu, T-H. (1997). A note on a global approach for general 0-1 fractional programming. European Journal of Operational Research vol. 101, 220–223.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Mavrotas, G., Diakoulaki, D. & Caloghirou, Y. A combinatorial multicriteria approach for corporate funding under policy restrictions. Oper Res Int J 1, 299–314 (2001). https://doi.org/10.1007/BF02936357
Issue Date:
DOI: https://doi.org/10.1007/BF02936357