Application of Fuzzy TOPSIS Technique for Evaluation of Project

The evaluation and selection of industrial projects before investment decision is often done by using marketing, technical and financial information. Financial assessment is commonly done using engineering economics techniques, but each technique has advantages and limitations in itself. On the other hand, in financial assessment, some of input data such as cash flow and interest rate may be uncertain and imprecise. For solving these problems, we propose a new method for the project selection problem. In this paper, four common methods of comparing alternative investments (Net Present Value, Rate of Return, Benefit Cost Analysis and Payback Period) are used as criteria in TOPSIS technique to obtain an aggregative assessment of criteria for projects. At first, by using a verbal variable, weight of each criterion in the form of a fuzzy number is defined and by using the optimistic, likely and pessimistic estimations, fuzzy desirability of projects based on any criterion is obtained. Then, by utilizing fuzzy theory basedTOPSIS, assessment of projects is done. A numerical example was used to illustrate how the proposed model works.