A fuzzy multi-criteria decision analysis approach for retail location selection

Abstract

This paper proposes fuzzy multi-criteria decision-making approach integrated with fuzzy real option value theory. The applicability of the proposed method was shown on a real-world supermarket location selection problem. Based on the interviews with the experts, the evaluation criteria for retail location selection were identified. Then the network for fuzzy analytic network process (ANP) method was constructed. The fuzzy real option value for each alternative was calculated and used in the proposed approach as the representative of the financial dimension. Finally, the preference ranking of alternatives and the relative importance of the criteria were obtained. The significant contribution of the proposed approach is that it integrates the financial dimension (FROV) of the location problem methodologically with the multi-criteria characteristic (FANP) of the problem. Another importance of this study is the first usage of real options valuation in the area of location selection science.