A New Methodology for Prioritizing Mining Strategies

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1 A New Methodology for Prortzng Mnng Strateges Mohammad Mad Fouladgar, Abdolreza Yazdan-Chamzn, and Samak Ha Yakhchal Abstract Mnng plays one crtcal role n most countres and t acts as a foundaton for growth and development. It produces raw materal for other sectors such as ndustry, agrculture, etc. So, determnng and prortzng the strateges of mnng are so mportant. Mscellaneous types of tools are offered for determnng and evaluatng of operatonal strateges. Analyzng the nternal and external envronments usng SWOT (strengths, weaknesses, opportuntes, and threats) helps to determne the current stuaton and to dentfy maor prospects and challenges that could sgnfcantly mpact strategy mplementaton n mnng sector. Mult crtera decson makng (MCDM) methods are approprate tools to prortze under sophstcated and envronment. Analytcal network process (ANP) and VIKOR (VlseKrterumska Optmzaca I Kompromsno Resene) are two hands of MCDM methods that are able to rank alternatves n decson problems wth conflctng crtera. The man am of ths paper s to develop an ntegrated model based on SWOT, ANP, and VIKOR to prortze the strateges of the Iranan mnng sector. We employed the SWOT analyss to determne enforceable strateges; then, ANP was appled n order to obtan the weght of SWOT factors, fnally the strateges were ranked by VIKOR technque. The results of proposed model show that mprovng the ablty of explotaton and producton outperforms other strateges. Index Terms SWOT, ANP, VIKOR, Mnng Strateges. I. INTRODUCTION Organzatons today deal wth unprecedented challenges and opportuntes n carryng out ther vtal msson. Managers always look for comprehensve pcture of present stuaton of the organzaton and a clear understandng of ts future organzaton. For ths reason, they need background nformaton of strengths, weaknesses, opportuntes, and threats (SWOT) stuaton of the organzaton n order to nvest the challenges and prospects of adoptng organzaton. SWOT analyss s an effectve framework for an organzaton (or a company) that helps to address the effectveness of a proect plannng and mplementaton []. SWOT analyss s used n dfferent sectors such as martme transportaton ndustry [2], technology development [3], devce desgn [4], food mcrobology [5], Hazard Analyss Crtcal Control Pont [6], Envronmental Impact Assessment [7], and toursm management [8]. However, the factors that can affect the SWOT are complex and often conflctng. One way to overcome the problem of evaluaton performance wth respect to varous Manuscrpt receved July 26, 20; revsed August 0, 20. Mohammad Mad Fouladgar and Abdolreza Yazdan-Chamzn, Fateh Research Group, Department of Strategc Management, Mlad Buldng, Artesh, Aghdaseh, Tehran, Iran Samak Ha Yakhchal, Assstant Professor of Industral Engneerng Dept & Drector of MBA programmers, Faculty of Engneerng, Unversty of Tehran, Tehran, Iran factors s the use of multple crtera decson makng (MCDM). The assumpton of ndependence of crtera s not always correct because n real world, there are crtera that are dependence. Analytcal network process (ANP) s an approprate tool n order to model complex problems wth all knds of relatonshp, dependency and feedback n the model and draws a systematc fgure of the decson makng problem. Lkewse, VIKOR technque s a sutable tool to evaluate alternatves. In ths paper, we appled the SWOT analyss and two mult-attrbute evaluaton method that are called the analytc network process (ANP) and VIKOR technques to rank the strateges of Iranan mnng sector. II. THE SWOT ANALYSIS The SWOT analyss has ts orgns n the 960s [2]. It s an envronmental analyss tool that ntegrates the nternal strengths/weaknesses and external opportuntes/threats. Ths method s mplemented n order to dentfy the key nternal and external factors that are mportant to the obectves that the organzaton wshes to acheve [9]. The nternal and external factors are known as strategc factors and are categorzed va the SWOT analyss. Based on the SWOT analyss, strateges are developed whch may buld on the strengths, elmnate the weaknesses, explot the opportuntes, or counter the threats [2]. SWOT maxmzes strengths and opportuntes, and mnmzes threats and weaknesses [0], and transforms the dentfed weaknesses nto strengths, and to take advantage of opportuntes along wth mnmzng both nternal weaknesses and external threats. SWOT can provde a good bass for successful strategy formulaton []. III. ANALYTICAL NETWORK PROCESS (ANP) Analytcal herarchy process (AHP) was ntroduced by Saaty (980) that s a mathematcal technque for mult-crtera decson makng [2]. Ths technque s based on par-wse comparson matrx. ANP s the general form of the analytc herarchy process (AHP), whch s ntroduced by Saaty (996) n order to solve problems nvolvng nteracton and feedback among crtera or alternatve solutons [3]. Ths method s able to consder network structures because many real world problems cannot be structured herarchcally. ANP s a general tool that s helpful n assstng the mnd to organze ts thoughts and experences and to elct udgments recorded n memory and quantfy them n the form of prortes [4]. Fg. llustrates the deference between herarchy and network structures. As showed n Fg., a herarchy s a lnear top down structure and network s a non-lnear structure that spreads out n all drectons. 342

2 A B method determnes the compromse soluton, and s able to establsh the stablty of decson performance by replacng the compromse soluton obtaned wth ntal weghts. The theory of the compromse soluton s a feasble soluton that s the closest to the deal soluton, and a compromse means an agreement establshed by mutual concesson [2]. The c concept of feasble soluton ( F ) and the deal soluton ( F ) s shown schematcally n Fg. 2. Fg.. The dfference between a herarchy (A) and a network (B) ANP can be descrbed n the followng steps [5]: Step. Model constructon and problem structurng: The dervaton of the weghts for all n components Cn regardng the dependences n relevance to an overall crteron, whch can be elcted based on expert knowledge. Step 2. Par-wse comparson matrces and prorty vectors: decson elements at each component are compared Par-wse wth respect to ther mportance towards ther control crteron, and the components themselves are also compared par-wse wth respect to ther contrbuton to the goal. Step 3. Supermatrx formaton: Let the components (clusters) of a decson system be C h, h =,... n, and let each component h have m h elements, denoted by e h, e h2,..., e hmn. The nfluence of a set of elements belongng to a component, on any element from another component, can be represented as a prorty vector by applyng par-wse comparsons n the same way as the AHP. A standard form of a supermatrx s as follows. where W s the prncpal egenvector of the nfluence of the elements compared n the th component to the th component. In addton, f the th component has no nfluence to the th component, then W = 0. The form of the supermatrx reles on the varety of ts structure. Step 4. Selecton of the best alternatves: If supermatrx only ncludes components that are nterrelated, addtonal calculatons must be made to obtan the overall prortes of the alternatves. The alternatve wth the largest weght should be selected, as t s the best alternatve as determned by the calculatons made usng matrx operatons. IV. VIKOR APPROACH Oprcovc (998) [6] developed VIKOR (n Serban: VlseKrterumska Optmzaca I Kompromsno Resene) for multcrtera optmzaton of complex systems [7]. Ths Fg. 2. Ideal and compromse solutons VIKOR s a helpful tool n mult-crtera decson makng, partcularly n a stuaton where the decson maker s not able, or does not know to express hs/her preference at the begnnng of system desgn [8,9]. The man procedure of the VIKOR method s descrbed below [9]: A. Determne the best f and the worst crteron functons, =, 2,, n. f values of all f = max f, f = mn f. () If the th functon represents a cost then: f = mn f, f = max f. (2) B. Compute the values Eqs. (3), (4): n = = S w ( f f )/( f f ), n = = R max[ w ( f f ) / ( f f )], S and R, =,2,, J, by Where w are the weghts of crtera, expressng ther relatve mportance. C. Compute the value Q, =,2,, J, by Eq. (5): Q = v( S S )/( S S ) + ( v)( R R )/( R R ) where S = mn S, S = max S, R = mn R, R = max R, and v s ntroduced as weght of the strategy of the maorty of crtera (or the maxmum group utlty ), here 0.5 v =. (3) (4) (5) (6) 343

3 D. Rank the alternatves, sortng by the values S, R, and Q, n decreasng order. The results are three rankng lsts. E. Propose as a compromse soluton the alternatve ( a ) whch s ranked the best by the measure Q (mnmum) f the followng two condtons are satsfed: C. Acceptable advantage : Qa ( ) Qa ( ) DQ where a s the alternatve wth second poston n the rankng lst by Q; DQ = /( J ) ; J s the number of alternatves. C2. Acceptable stablty n decson makng : The best alternatve, ranked by Q, s the one wth the mnmum value of Q. The man rankng result s the compromse rankng lst of alternatves, and the compromse soluton wth the advantage rate. V. CASE STUDY Mnng s one of the most actvtes so that other actvtes such as manufacturng, constructon, and agrculture, could not exst wthout prmary mneral producton. Mnng plays a leadng socal-economc role n Iran. At ts varous stages from exploraton to producton and sellng t generates a sgnfcant number of obs and ncome for the country. Due to the rsng demand for prmary mnerals by the ndustral countres and most rapdly growng economes, mnng s becomng ncreasngly mportant. Iran s a country located n the Mddle East wth a non-federated governmental system. Iran s dvded nto thrty provnces. Iran has one of the world's largest znc (8) reserves and second-largest reserves of copper. It also has mportant reserves of ron, uranum, lead, chromate, manganese, coal and gold. VI. THE IMPLEMENTATION OF PROPOSED MODEL The proposed model of ths paper uses an ntegrated method of the SWOT analyss, ANP, and VIKOR to provde a framework for rankng the Iranan mnng strateges. In order to mplement the model, we frst dscuss the SWOT, and then the ANP approach s appled to obtan the weght of the SWOT factors. Fnally, VIKOR ranks the Iranan mnng strateges. The data of the SWOT analyss are based on the aggregate mnng strategy reports of the mnstry of ndustres and mnes. The term strengths contans advantages and benefts from the adopton of strategc management practces. Smlarly, weaknesses would encompass agents and parameters that are dffcultes n the efforts of companes to accept any strategc management practces. Moreover, opportuntes may nclude external benefts for companes from the acceptance of strategc management practces. Fnally, threats may encompass future problems and dffcultes from the preventon of mplementng any strategc management practces. We prepared a lst of strengths, weaknesses, opportuntes, and threats, and then have an ntervew wth the experts n mnng strateges of Iran to modfy the lst. The results of the SWOT analyss based on expert knowledge are presented n Table. Internal External TABLE. SWOT ANALYSIS AND STRATEGIC RECOMMENDATIONS Recommended strateges SWOT analyss Strengths: S. Hgh potental of mnerals, S2. Large resources of mnerals, S3. Mscellaneous mnerals Weakness: Wn. The lack of a complete data base, Wn2. Takng tme from explotaton to sell, Wn3. Low effcency n mnng sector Opportuntes: O. Labor force wth low wage, O2. Access to energy resource, O3. The strategc locaton of Iran, O4. Increasng demand for prmary materals Threats: T. Exportng mnerals wthout refnng, T2. Non-membershp of Iran n WTO, T3. Hgh rsk, T4. The fluctuatons of row mneral prces A. Improvng the ablty of explotaton and producton. A2. Investng n exploraton sector. A3. Investng n the scences of earth (nformaton, technology, and labor force). A4. Important measures and poltcs n relevant organzatons wth mnng sector and carryng out research & development (R&D). A5. The prvatzaton of mnes and relatve ndustres. A6. The correcton of rules and regulatons and settng a cadastral system up. As shown n Table, sx strateges are earned from the SWOT analyss. These strateges n order to mplement should be ranked because of the lack of fnance and tme as two lmtatons. For ths reason, we appled the ANP technque and the VIKOR approach n order to obtan the weght of SWOT factors and prortze strateges respectvely. The proposed model s defned as follows: Step : The herarchy and network model proposed n ths study for SWOT analyss s composed of four levels. The goal (best strategy) s ndcated n the frst level, the crtera (SWOT factors) and sub-crtera (SWOT sub-factors) are found n the second and thrd levels respectvely, and the last level s composed of the alternatves (alternatve strateges). The supermatrx of a SWOT herarchy wth four levels s as follows: Goal SWOT factors w W2 0 0 w = SWOT sub factors 0 W Alternatves 0 0 W4 I Step 2: If assume that there s no dependence among the SWOT factors, par-wse comparson of the SWOT factors 344

4 usng a 9 scale s made wth respect to the goal. The mportance weghts of the crtera determned by twelve decson-makers that are obtaned through Eq. () are shown n Table 2. The group consstency rato (GCR) s avalable n the last row of the matrx. k k / k x = ( x ) k = () where x s the crsp weght of each crteron that are determned by all experts, k s the number of expert (here, k s equal to 2). Step 3: Inner dependence among the SWOT factors s extracted by analyzng the mpact of each factor on every other factor usng par-wse comparsons. As mentoned, exstence of dependence among factors can be modeled through the ANP approach. The par-wse comparson matrces are formed for the SWOT factors. Based on the computed relatve mportance weghts, the nner dependence matrx of the SWOT factors (W2) s generated. As each factor of the SWOT s affected by two other factors, so that; S factor s affected by W and O factors, W factor s affected by S and T factors, O factor s affected by T and S factors, T factor s affected by W and O factors. The results are calculated as the followng: W2 = TABLE 2. PAIRWISE COMPARISON OF SWOT FACTORS WITH ASSUMPTION OF INDEPENDENCE SWOT factors S W O T Relatve mportance of SWOT factors S W O T GCR=0.04 Step 4: The nterdependent weghts of the SWOT factors are calculated as follows: wfactors = W2 w = = The results change from 0.49 to 0.38, 0.2 to 0.3, 0.3 to 0.9, and 0.5 to 0.3 for the prorty values of factors S, W, O and T, respectvely. As observed n the results obtaned for the factor weghts are dfference sgnfcantly. Step 5: The local weghts of the SWOT sub-factors are calculated usng the par-wse comparson matrx. The par-wse comparson matrces, whch are weghted by twelve experts and then are calculated by Eq. (), are presented n Table 3. TABLE 3. PAIRWISE COMPARISON MATRICES FOR SWOT SUB-FACTORS LOCAL WEIGHTS S S S2 S3 Local weghts S S S GCR=0.007 W Wn Wn2 Wn3 Wn Wn Wn GCR= O O O2 O3 O4 O O O O GCR=0.073 T T T2 T3 T4 T T T T GCR=0.097 Step 6. The overall weghts of the SWOT sub-factors are calculated by multplyng the nterdependent weghts of SWOT factors obtaned n Step 4 wth the local weghts of SWOT sub-factors found n Step 5. The computatons of w sub-factors (global) vector are provded below. The rank of global sub-factors s shown n Fgure 5. Step 7. At ths step of the proposed model, the team members were asked to establsh the decson matrx by comparng alternatves under each of the SWOT sub-factors. Based on the responses of twelve experts, and usng Eq. () the obtaned results are as shown n Table 4. Step 8. After formng the decson matrx, accordng to S, S2, S3, O, O2, O3, and O4 crtera are beneft crtera, and Wn, Wn2, Wn3, T, T2, T3, and T4 are cost crtera, therefore the best f and the worst f values of all crteron functons are determned. Then, the values S and R are calculated as shown n Table

5 TABLE 4. IMPORTANT RATING OF EACH ALTERNATIVE S S2 S3 Wn Wn2 Wn3 O O2 O3 O4 T T2 T3 T4 A A A A A A TABLE 5. THE VALUES S AND R S S2 S3 Wn Wn2 Wn3 O O2 O3 O4 T T2 T3 T4 A A A A A A S R Step 9: In ths step, the value Q s measured wth v=0.5 (votng by consensus). The results of Q and the rankng of alternatves (strateges) are presented n Table 6. Accordng to Q values, the rankng of the alternatves n descendng order are A, A5, A6, A2, A3 and A4. Now, two condtons are nvestgated as follows. The frst condton s gven as: > So, the frst condton s satsfed. As presented n Table 5, alternatve A also s the best ranked by S or/and R; therefore, the second condton s satsfed. Proposed model results ndcate that A s the best alternatve wth the lowest Q. TABLE 6. RANKING BY VIKOR METHOD Alternatves Q Rank A 0 A A A4 6 A A VII. CONCLUSION In ths study, we proposed an ntegrated model of the SWOT analyss and ANP approach and VIKOR technque n order to rank feasble strateges. The SWOT analyss constructs a framework, and the weghts of SWOT factors and alternatves are calculated va ANP and VIKOR respectvely. The SWOT analyss was used n order to defne strateges for Iranan mnng sector. The SWOT analyss determned sx strateges n order to mplement n Iran. Then, ANP s employed to obtan the crtera weghts and performance ratngs when there s nterdependence of characterstcs. Fnally, the VIKOR method s used to prortze strateges. The results show that A has the hghest rank. From ths result, decson makers or authortes should mprove the ablty of explotaton and producton. REFERENCES [] M. Talea, A. Mansouran, A. Sharf. Surveyng general prospects and challenges of GIS mplementaton n developng countres: a SWOT AHP approach. J Geogr Syst, 2009, : [2] A. Kandakoglu. M. Celk, I. Akgun. A mult-methodologcal approach for shppng regstry selecton n martme transportaton ndustry. Mathematcal and Computer Modellng, 2009, 49: [3] S. Ghaznoory, A., Dvsalar, A.S. Soof. A new defnton and framework for the development of a natonal technology strategy: The case of nanotechnology for Iran. Technologcal Forecastng & Socal Change, 2009, 76: [4] F.G. Wu, M.Y. Ma, R.H. Chang. A new user-centered desgn approach: A har washng assstve devce desgn for users wth shoulder moblty restrcton. Appled Ergonomcs, 2009, 40: [5] J. Ferrer, C. Prats, D. López, J. Vves-Rego. Mathematcal modellng methodologes n predctve food mcrobology: A SWOT analyss. Internatonal Journal of Food Mcrobology, 2009, 34: 2 8 [6] S. Sarter, G. Sarter, P. Glabert. A Swot analyss of HACCP mplementaton n Madagascar. Food Control, 200, 2: [7] R. Palwal. EIA practce n Inda and ts evaluaton usng SWOT analyss. Envronmental Impact Assessment Revew, 2006, 26: [8] M. Kaanus, J. Kangas, M. Kurttla. The use of value focused thnkng and the A WOT hybrd method n toursm management. Toursm Management, 2004, 25: [9] G. Houben, K. Lene, K. Vanhoof. A knowledge-based SWOT-analyss system as an nstrument for strategc plannng n small and medum szed enterprses. Decson Support Systems, 999, 26: [0] S.H. Amn, J. Razm,, G. Zhang. Suppler selecton and order allocaton based on fuzzy SWOT analyss and fuzzy lnear programmng, Expert Systems wth Applcatons, 20, : [] H.H. Chang, W.Ch. Huang. Applcaton of a quantfcaton SWOT analytcal method, Mathematcal and Computer Modellng, 2006, 43: [2] T. Saaty. The analytc herarchy process.new York: McGraw Hll, 980. [3] T.L. Saaty. Decson Makng wth Dependence and Feedback: Analytc Network Process, RWS Publcatons, Pttsburgh, 996. [4] T.L. Saaty, L.G. Vargas. Decson makng wth the Analytc network process; Economc, Poltcal, Socal and Technologcal Applcatons wth Benefts, Opportuntes, Costs and Rsks. Sprnger Scence, [5] S.H. Chung, A.H.L. Lee, W.L. Pearn. Analytc network process (ANP) approach for product mx plannng n semconductor fabrcator. Internatonal Journal of Producton Economcs, 2005, 96: [6] S. Oprcovc. Multcrtera optmzaton of cvl engneerng systems. Belgrade: Faculty of Cvl Engneerng, 998. [7] S. Oprcovc, G. H. Tzeng. Compromse soluton by MCDM methods: A comparatve analyss of VIKOR and TOPSIS. European Journal of Operatonal Research, 2004: 56, [8] Sh. Wu, L. Xu, T. Yan. Bd Evaluaton of Electrc Equpment Based on VIKOR Method. Proceedngs of the 2008 Internatonal Conference on MultMeda and Informaton Technology, IEEE,

6 [9] M.K. Sayad, M. Heydar, K. Shahanagh. Extenson of VIKOR method for decson makng problem wth nterval numbers. Appled Mathematcal Modellng, 2009, 33: Mohammad Mad Fouladgar. Master of Scence n the Dept of Strategc Management, Manager of Fateh Reaserch Group, Tehran-Iran. Author of 0 research papers. In 2007 he graduated from the Scence and Engneerng Faculty at Tarbat Modares Unversty, Tehran-Iran. Hs nterests nclude decson support system, water resource, and forecastng. Samak Ha Yakhchal receved hs B.Sc. of Industral Engneerng 2003, hs MSc of Industral Engneerng n 2005, and hs Ph.D. of Industral Engneerng n Now, he s Assstant Professor of Industral Engneerng Dept & Drector of MBA programmers, Faculty of Engneerng, Unversty of Tehran, Tehran, Iran. Hs area of expertse s n Proect Management wth nterest n Strategc Management, Decson Makng, and Fuzzy Logc. Abdolreza Yazdan-Chamzn. Master of Scence n the Dept of Strategc Management, research assstant of Fateh Reaserch Group, Tehran-Iran. Author of more than 20 research papers. In 20 he graduated from the Scence and Engneerng Faculty at Tarbat Modares Unversty, Tehran-Iran. Hs research nterests nclude decson makng, forecastng, modelng, and optmzaton. 347