A multiplicative optimization model for constructing composite indicators

Composite indicators (CIs) have been widely used for benchmarking and performance comparisons in many different areas. Past studies have shown that the weighted product method may be a good choice in constructing CIs. However, a problem in its application is the determination of the weights for sub-indicators. This paper extends the weighted product method and proposes a multiplicative optimization model for constructing CIs to avoid the subjectivity in determining the weights for sub-indicators. Additional information on the weights, if available, can be easily incorporated into the proposed model. A case study on the technology achievement index is given to illustrate the use of the proposed multiplicative optimization model.