Tan, B., Lin, C., and Hsieh, P. J. 2003. Application of Fuzzy Set Theory and Multiobjective Decision Making in Project Portfolio Selection. NTU Management Review, 13 (2): 101-135
Bertram Tan, Department of Business Administration, National Cheng Kung University
Chinho Lin, Department of Information Management, National Chung Cheng University
Ping-Jung Hsieh, Department of Information Management, Kun Shan University of Technology
Abstract
Portfolio selection for strategic management is a crucial activity in many organizations, and it is concerned with a complex process that involves many decision-making situations. In the study, we propose a systematic approach that incorporates fuzzy set theory in conjunction with portfolio matrices to assist managers in reaching a better understanding of the overall competitiveness of their businesses' portfolios. We also present a multiobjective linear programming (MOLP), which helps to select strategic plans by using the result derived from the previous portfolio analysis and other financial data. The proposed approach has the advantage of dealing with the uncertainty problem of linguistic terms, providing a technique that presents the diversity of confidence level and optimism level of decision makers. Furthermore, solving MOLP by using fuzzy programming offers an effectively quantitative method for managers to balance the satisfaction of multiple objectives and allocate constrained resources optimally among proposed strategies. An illustration from a real-world situation demonstrates the approach. Although a particular portfolio here can be modified to incorporate other portfolio matrices.
Keywords
Multiple objective decision making Project portfolio selection Fuzzy programming