Comparative Analysis of Normalization Procedures in TOPSIS Method: With an Application to Turkish Deposit Banking Market

Article type: Research Article

Authors: Çelen, Aydın

Affiliations: Üniversiteler Mahallesi 1597, Cadde No. 9, Çankaya 06800, Ankara, Turkey, e-mail: acelen@rekabet.gov.tr

Abstract: In this study, we evaluated the effects of the normalization procedures on decision outcomes of a given MADM method. For this aim, using the weights of a number of attributes calculated from FAHP method, we applied TOPSIS method to evaluate the financial performances of 13 Turkish deposit banks. In doing this, we used the most popular four normalization procedures. Our study revealed that vector normalization procedure, which is mostly used in the TOPSIS method by default, generated the most consistent results. Among the linear normalization procedures, max-min and max methods appeared as the possible alternatives to the vector normalization procedure.

Keywords: MADM, TOPSIS, normalization, consistency, performance evaluation

Journal: Informatica, vol. 25, no. 2, pp. 185-208, 2014