Fuzzy multi-attribute evaluation of investments

Abstract

Most companies have a large number of projects that they would like to accomplish for various reasons. However, financial and material limitations cause that only some of the investments can be undertaken, which rises the problem of selecting the portfolio of the most effective investment projects. Selecting a portfolio from available project proposals is crucial for the success of each company. This paper proposes a practical framework for modelling projects portfolio selection problem with fuzzy parameters resulting from uncertainty associated with decision makers’ judgment. A fuzzy multi-attribute decision-making approach is adopted. A two-step evaluation model that combines fuzzy AHP and fuzzy TOPSIS methods is used to rank potential projects. The proposed approach is illustrated by an empirical study of a real case from steel industry involving fifteen criteria and ten projects. The case study shows the effectiveness and feasibility of the proposed evaluation procedure.