Exhibit 14.8
The following questions use the information below.
A company needs to buy a new insurance policy. They have three policies to choose from, A, B and C. The policies differ with respect to price, coverage and ease of billing. The company has developed the following AHP tables for price and summary. The other tables are not shown due to space limitations.
-Refer to Exhibit 14.8. The Consistency Ratio indicates consistency in the pairwise comparison matrix if the ratio is
A) ≤ 0.05
B) ≤ 0.10
C) ≤ 0.20
D) ≤ 0.30

Question

Exhibit 14.8
The following questions use the information below.
A company needs to buy a new insurance policy. They have three policies to choose from, A, B and C. The policies differ with respect to price, coverage and ease of billing. The company has developed the following AHP tables for price and summary. The other tables are not shown due to space limitations.  
-Refer to Exhibit 14.8. The Consistency Ratio indicates consistency in the pairwise comparison matrix if the ratio is
A) ≤ 0.05 
B) ≤ 0.10 
C) ≤ 0.20 
D) ≤ 0.30

Quizplus · Accepted Answer

According to the table, the consistency ratio for both price and summary pairwise comparison matrices is 0.065, which is less than or equal to 0.10. Therefore, the pairwise comparisons can be considered consistent. To determine the best choice, we need to consider the total weights for each policy. Policy A has the highest total weight of 0.462, followed by Policy B with a total weight of 0.353, and Policy C with a total weight of 0.185. Hence, the best choice is Policy A, as it has the highest total weight and is the most preferred option by the company.

Exhibit 14.8 The Following Questions Use the Information Below