Power customer satisfaction and profitability analysis using multi-criteria decision making methods Rabah Medjoudj a,⇑ , Djamil Aissani b , Klaus Dieter Haim c a Lamos Laboratory, Electrical Engineering Department, University of Bejaia, Algeria b Lamos Laboratory, Operational Research Department, University of Bejaia, Algeria c University of Sciences and Technology, Zittau, Germany article info Article history: Received 8 November 2010 Received in revised form 22 August 2012 Accepted 29 August 2012 Available online 24 October 2012 Keywords: Electrical distribution system Decision making methods Economic criteria Customer satisfaction abstract Nowadays, the consumer demands for electrical energy are increasingly growing, because this energy is present in all fields of human activity. Any company producing and distributing electric power sets two main objectives, namely: customer satisfaction and profit making. The aim of this paper is to investigate appropriate tools (multi-criteria decision making methods) aiding decision makers to achieve these goals. The criteria adopted revolve around quality of service and include: cost, reliability, availability, maintain- ability and power quality. However, the alternatives are technical and organizational measures often taken in planning and operation phases of electrical power systems. Three methods are used, namely: the analytic hierarchy process (AHP), the cost benefit analysis (CBA) and the economic criteria inspired from game theory (ECIGT). The first method highlights the impact of the experts’ views in the formalism of the final decision of the manager and it is viewed as a transparent decision process. As for the ECIGT, it provides several scenarios to define a strategy according to the decision maker’s behavior. One of its important finding resides in the possibility of evaluating the reactions of the customers towards the deci- sions taken by the system manager. Consequently, it allows the analysis of the enterprise profitability. However, the CBA method is efficiently integrated into these two complex methods decision making. The application developed in this paper shows that RAM (reliability, availability and maintainability) cri- teria are significant stakes in the performance of a business and are an important asset for new projects justification. Ó 2012 Elsevier Ltd. All rights reserved. 1. Introduction Distributors of electrical energy are often working to meet a balance between the requirements’ satisfaction of the end users of the power system and the containment of the generated costs. This issue requires the knowledge of useful criteria aiding to lead to an appropriate management without prejudicial constraints. In several cases, the decisions taken by managers are resulted from the ultimate reflections of a group of experts who associates weights to the importance of both suitable criteria and suggested alternatives. In both competitive and monopoly markets, customer satisfaction is a prerequisite and a critical business objective. In a liberal environment, the customer has free choice to provide the best services and in this case the non-competitive company risks losing much of the market, consequently it reduces its profitability. In the case of a monopoly market, the consumer dissatisfaction can lead to a conflict of interest which undoubtedly will have adverse consequences for both parties. This paradigm is addressed in the context of multi-criteria decision making. The aim of this paper is to investigate mechanisms leading to simultaneously analyse customer satisfaction and enterprise profitability in both monop- oly and liberal environments. It provides decision makers with sci- entific tools aiding them to choose the best alternative from one sample to meet the fixed goals, objectives, desires values and so. Compared to this issue, three multi-criteria decision making meth- ods are introduced, insuring the development of mathematical models taking into account the psychological side of both decision makers and customers, namely: the analytic hierarchy process (AHP), the cost benefit analysis (CBA) and the economic criteria in- spired from game theory (ECIGT). The AHP method is a transparent process that remains very useful for a company insuring a public service. It is also a measurement theory that prioritizes the hierar- chy and consistency of judgmental data provided by a group of decision makers. As for the ECIGT approach, it presents a certain virtue, like the ability to simulate different possible states of the manager (optimistic, pessimistic, prudent or gambler) and allows to understand the reactions of consumers (not satisfied, satisfied or quite satisfied) in relation to the attitude of the decision maker. 0142-0615/$ - see front matter Ó 2012 Elsevier Ltd. All rights reserved. http://dx.doi.org/10.1016/j.ijepes.2012.08.062 ⇑ Corresponding author. Fax: +213 34218716. E-mail addresses: medjoudj@yahoo.fr (R. Medjoudj), lamos_bejaia@hotmail.com (D. Aissani), KDHaim@hs-zigr.de (K.D. Haim). Electrical Power and Energy Systems 45 (2013) 331–339 Contents lists available at SciVerse ScienceDirect Electrical Power and Energy Systems journal homepage: www.elsevier.com/locate/ijepes