Application of the fuzzy weighted average in strategic portfolio management

Chinho Lin, Bertram Tan, Ping Jung Hsieh

Research output: Contribution to journalArticle

44 Citations (Scopus)

Abstract

We propose a systematic approach that incorporates fuzzy set theory in conjunction with portfolio matrices to assist managers in reaching a better understanding of the overall competitiveness of their business portfolios. Integer linear programming is also accommodated in the proposed integrated approach to help select strategic plans by using the results derived from the previous portfolio analysis and other financial data. The proposed integrated approach is designed from a strategy-oriented perspective for portfolio management at the corporate level. It has the advantage of dealing with the uncertainty problem of decision makers in doing evaluation, providing a technique that presents the diversity of confidence and optimism levels of decision makers. Furthermore, integer linear programming is used because it offers an effective quantitative method for managers to allocate constrained resources optimally among proposed strategies. An illustration from a real-world situation demonstrates the integrated approach. Although a particular portfolio matrix model has been adopted in our research, the procedure proposed here can be modified to incorporate other portfolio matrices.

Original languageEnglish
Pages (from-to)489-511
Number of pages23
JournalDecision Sciences
Volume36
Issue number3
DOIs
Publication statusPublished - 2005 Aug

All Science Journal Classification (ASJC) codes

  • Business, Management and Accounting(all)
  • Strategy and Management
  • Information Systems and Management
  • Management of Technology and Innovation

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