Abstract
In this chapter, an alternative measure to Euclidean distance measurement is proposed which is used to calculate positive and negative ideal solutions in the traditional TOPSIS method. Lp Minkowski family and L1 family distance measures were used for this purpose. By taking the averages of the distance measurements in the Lq and L1 families, more general and accurate level units were tried to be obtained. Thus, it was shown that TOPSIS method can give different results according to the distance measure used. The importance of the distance measurement unit was emphasized to rank the alternatives correctly. The implementation and evaluation of the proposed method was carried out through the financial performance of the deposit bank operating in the Turkish Banking Sector. It was seen that the rankings of the alternatives changed according to the distance measurements used. By referring to the distance measurements that can be used in the TOPSIS method, it was shown that the rank of the alternatives can vary according to the preferred distance measure.
TopBackground
The first known application in the field of MCDM was performed Churchman et al. (1957). In this application for solving a decision-making problem the Simple Additive Weighting (SAW) method was used. Then, various studies for MCDM were performed. It is possible to list the most used ones as follows: TOPSIS (Technique for Order Preference ny Similarity to an IdealSolution) (Hwang and Yoon, 1981; Deng et al., 2000), AHP (Analitic Hierarchy Process) (Saaty 1980, 2000; Belton and Gear 1983; Lootsma 1999), ELECTRE (Elimination Et Choix Traduisant La Realite´-Elimination and Choice Expressing The Reality) (Roy 1989, 1991; Roy and Vincke 1981), VIKOR (Visekriterijumska Optimizacija I Kompromisno Resenje - Multicriteria Optimization and Compromise Solution) (Yu, 1973; Zeleny, 1982; Opricovic 1998; Tzeng and Huang, 2011), PROMITHEE (Preference Ranking Organization Methods for Enrichment Evaluation(Brans et al., 1984), etc.
Key Terms in this Chapter
Decision Making: Selection of the best among the various alternatives.
TOPSIS: A MCDM method.
MCDM: Decision making when there are multiple criteria decision making.
Lq Distance Family: The family that hosts the distances of Euclidean, Manhattan, Minkowski and Chebyshev.
Financial Performance: Calculation of a general financial score using various financial criteria.
L1 Distance Family: The family that hosts the distances Sørensen, Gower, Soergel, Kulczynski, Canberra and Lorentzian.