The Balanced Scorecard and Multi Criteria Decision Making: a Comparison in an Airline Context

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THE BALANCED SCORECARD AND MULTI CRITERIA DECISION MAKING: A COMPARISON IN AN AIRLINE CONTEXT Abstract This paper compares and contrasts the performance measurement techniques of The Balanced Scorecard (BSC) which is widely used in industry and Multi Criteria Decision Making (MCDM) which is primarily a research tool. A review of the literature revealed a paucity of “real world” airline applications of the BSC while MCDM has been applied to the airline industry but primarily from a research/academic perspective. The aim of this piece of work was to examine the suitability of each process for application to the airline industry. The results show that both methods are suitable for performance measurement in an airline context but that both…show more content…
The ultimate goal is pareto optimisation which is the point at which no further gains in efficiency can be made in one DMU with no subsequent loss of efficiency in another DMU (Zionts, 1979). MCDM is suitable for use across a wide range of industries including: transportation and logistics, business and financial management, manufacturing, energy management and military service, however, these applications were all from a research/academic perspective (Toloie-Eshlaghy & Homayonfar, 2011) suggesting that MCDM may be more suited to research than industry. Steuer, Gardiner & Grey (1996) reported that MCDM has been ranked by various surveys as the 5th and 7th most useful operations research/management science tool. However, MCDM can and has been successfully been applied in industry (Bufardi et al., 2003)(Liou & Chang, 2010) Due to its complexity MCDM can be a costly and lengthy process to implement. There are in excess of 26 different MCDM methods and no formal selection procedure for selecting the appropriate method for a given application (Bufardi et al., 2003). While MCDM is undoubtedly highly utilised in research settings, there is a definite shortage of “real world” applications (Montibeller, Gummer & Tumidei, 2006) despite its demonstrated usage in industry. An ongoing issue with MCDM is the subjectivity of the DM’s. Decision Makers may have contradictory opinions resulting in a situation whereby the solution chosen is a DM compromise as
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