Choice: Making The Trade-offs

Choice: Making the Trade-Offs

What makes choosing so difficult?

1

So what do you do?

First eliminate all alternatives that don’t meet your “must” criteria

The Gibson’s New Home

The Gibson’s House Purchase Musts: Down payment <= $20,000 Monthly payment <= $2,000 Bedrooms: 4+ Bathrooms: 2+ Location: Not downtown or over 45 minutes commute to work Occupancy: w/in 60 days Wants: Minimum down payment Low monthly payment Location convenient to work Use present furnishings, drapes, etc.

Wants (continued): Shelter for 2 cars Public transportation nearby Convenient to schools Convenient to shopping, etc. Workshop & storage space Stable resale value Attractive modern style Good landscaping Large play area for kids Large, modern kitchen w/view Large comfortable family room Quiet Street, good neighborhood Minimum maintenance costs Minimum risks – tax increase

2

Must criteria analysis Musts

Then create your consequence matrix

Must criteria analysis

House A

House B

House C

Musts

House A

House B

House C

Down Payment <= $20,000

$17,500

$16,000

$19,500

Down Payment <= $20,000

$17,500

$16,000

$19,500

Monthly payment <= $2,000

$2,000

$1,600

$2,500

Monthly payment <= $2,000

$2,000

$1,600

$2,500

4 + Bedrooms

4

4

4 + Bedrooms

4

4

2+ baths

2

2

2+ baths

2

2

Not downtown or over 45 minutes compute time to work

30 minutes

22 minutes

Not downtown or over 45 minutes compute time to work

30 minutes

22 minutes

Occupancy within 60 days

45 days

45 days

Occupancy within 60 days

45 days

45 days

Wants

House A

House B

Minimum down payment

$17,500

$16,000

Lowest monthly payment Location convenient to work

$2,000 Good

$1,600 OK

Use present furnishing, drapes

Wants

FAIL

House A

House B

Attractive modern style

Good

Excellent

Good landscaping

New

OK

Unfenced

Fenced

Large play area for kids

Good

Very good

Large, modern kitchen w/view

Good

Good

Shelter for 2 cars Public transportation near

Carport Bus

Garage Bus close

Large comfortable family room

Yes

None

Good

Fair

Convenient to schools

.5 mile

.25 mile

Convenient to shopping, etc.

I mile

.5 mile

Quiet street, good neighborhood Minimum maintenance costs

Good

Average

Workshop & storage space

Large

Poor

Minimum risk- tax increase

High

Low

Stable resale value

Good

Good

Now start making trade-offs

3

Dominated Alternatives & Even Swaps

The Dominated Alternatives technique eliminates inferior alternatives.

Weekend Getaway

If alternative A is better than alternative B on some objectives & no worse than B on all other objectives, B can be eliminated.

Weekend Getaway

Getaway A

Getaway B

Getaway C

Getaway D

Getaway E

Low cost

$450

$500

$500

$450

$500

Good weather

Warm, possible rain

Warm & sunny

Cold

Cool

Cold

Short travel time

3 hours

3 hours

3 hours

3 hours

2.5 hours

Getaway A

Getaway B

Getaway C

Getaway D

Getaway E

Low cost

$450

$500

$500

$450

$500

Good weather

Warm, possible rain

Warm & sunny

Cold

Cool

Cold

Short travel time

3 hours

3 hours

3 hours

3 hours

2.5 hours

Practical dominance: a slight advantage on one objective does not outweigh the disadvantages on the other factors

4

Weekend Getaway

Weekend Getaway

Getaway A

Getaway B

Getaway C

Getaway D

Getaway E

Getaway A

Getaway B

Getaway C

Getaway D

Getaway E

Low cost

$450

$500

$500

$450

$500

Low cost

$450

$500

$500

$450

$500

Good weather

Warm, possible rain

Warm & sunny

Cold

Cool

Cold

Good weather

Warm, possible rain

Warm & sunny

Cold

Cool

Cold

Short travel time

3 hours

3 hours

3 hours

3 hours

2.5 hours

Short travel time

3 hours

3 hours

3 hours

3 hours

2.5 hours

If all alternatives for a given objective are rated equally, you can ignore that objective in choosing alternatives.

Vincent’s Job Decision Consequence Table

Vincent’s Job Decision Consequence Table

Alternatives Job A

Objectives Monthly Salary

Vincent’s decision

Schedule Flexibility Skills Development

$2,000

3

Enjoyment

Low

4

Computer

Computer People

14

High

3 tie

12

3 5

Health, dental,

2 Health, tie dental

5

1 tie Great

3 tie Good

3 tie

1

retirement

10 Health

Good

$2,200

2 Moderate

2 tie

Operations Computer

Job E

$1,900

4

1

1 Manage

4

Job D

$1,800

5

Moderate

Alternatives

Job C

$2,400

1

2 tie

Vacation annual 2 days Benefits

Job B

Organizational

5 1

15

Health, 4 retirement

1tie

None

5

Great

Multitasking Time Mgmt

2

3 tie

12

Health, 2 tie dental

5

Boring

Objectives Monthly Salary Schedule Flexibility Skills Development Vacation annual days Benefits Enjoyment

Job A $2,000

3

Moderate

2 tie

Computer

4

Job B $2,400

1 4

Low

Computer Manage People

1

Job C $1,800

5

Job D $1,900

4

Job E $2,200

2

High

Moderate

Operations Computer

Organizational

Multitasking Time Mgmt

1 3

5

5

None

2

14

12 3 tie

15

3 tie12

Health, dental,

1

Health, dental

2 tie

Health

5

Health, retirement

4

2dental tie

1Great tie

3Good tie

3 Good tie

Great 1tie

5Boring

2

retirement

5

10

2 tie

1

Health,

5

Vincent’s Job Decision Consequence Table

Vincent’s Job Decision Consequence Table

Alternatives Objectives Monthly Salary Schedule Flexibility Skills Development Vacation annual days Benefits Enjoyment

Job A $2,000

3

Moderate

2 tie

Computer

4

Job B $2,400

1 4

Low

Computer Manage People

1

Job C $1,800

5

$2,200

2

Monthly Salary

Organizational

Multitasking Time Mgmt

15

3 tie12

Health, retirement

4

Health, dental

2 tie

Benefits

Great 1tie

5Boring

Enjoyment

3

12 3 tie

1

Health, dental

2 tie

5

1Great tie

3Good tie

3 Good tie

5

10

Health

2 tie 5

1

5

None

Objectives

Operations Computer

14

retirement

$1,900

4

Job E

Moderate

Health, dental,

2

Alternatives Job D

High

1

Vincent’s Job Decision Consequence Table

2

Schedule Flexibility Skills Development Vacation annual days

Job A $2,000

3

Moderate

2 tie

Computer

4

Job B

Job C

$2,400

1 4

Low

Computer Manage People

1

$1,800

5

Organizational

Multitasking Time Mgmt

15

3 tie12

Health, retirement

4

Health, dental

2 tie

Benefits

Great 1tie

5Boring

Enjoyment

3

12 3 tie

1

2 tie

5

1Great tie

3Good tie

3 Good tie

5

5

1

5 2

Continental

United

Cost of Airfare

$900

$1,000

Frequent Flier Miles

None

2,000

Even Swaps

Use even swaps to eliminate some objectives!

10

Health

2 tie

None

Monthly Salary

Operations Computer

Health, dental

1.Determine necessary change to cancel out objective

$2,200

2

Objectives

Moderate

14

retirement

$1,900

4

Job E

High

1

Health, dental,

2

Alternatives Job D

Schedule Flexibility Skills Development Vacation annual days

Job A

Job B

$2,000

1

Moderate

2 tie

Computer

4

Job C

$2,400

3

4

Low

Computer Manage People

1

$1,800

5

Job D $1,900

4

Job E $2,200

2

High

Moderate

Operations Computer

Organizational

Multitasking Time Mgmt

1 3

5

5

None

2

14

12 3 tie

15

3 tie12

Health, dental,

1

Health, dental

2 tie

Health

5

Health, retirement

4

2dental tie

1Great tie

3Good tie

3 Good tie

Great 1tie

5Boring

2

retirement

5

1

Health,

Continental

United

Cost of Airfare

$900

$1,000

Frequent Flier Miles

None

2,000

Even Swaps 2.Assess what change in another objective would compensate for the change

10

2 tie

6

Even Swaps 3.Make the even swap

Cost of Airfare Frequent Flier Miles

Continental

United

$900

$1,000

Cost of Airfare

2,000

Frequent Flier Miles

None

Even Swaps

Continental

United

$900

$1,000

2,000

None

What are frequent flyer miles worth to you?

Even Swaps Cost of Airfare Frequent Flier Miles

Continental

United

$900

$1,000 $850

None

2,000

If FF Miles = $150, then United ticket can be reduced to $850

Continental

United

Cost of Airfare

$900

$1,000

Frequent Flier Miles

None

Even Swaps

Continental

United

Cost of Airfare

$900

$1,000

Frequent Flier Miles

None

Even Swaps

$950

2,000

If FF Miles = $50, then United ticket can be reduced to $950

$900

2,000

Let’s look at Alan’s office decision

If FF Miles = $100, then United ticket can be reduced to $900

7

Alan’s Office Decision

Alternatives Objectives Parkway Lombard Baranov Montana Pierpoint

Rank alternatives on each objective

Rank alternatives on each objective

Alternatives Objectives Parkway Lombard Baranov Montana Pierpoint

Alternatives Objectives Parkway Lombard Baranov Montana Pierpoint

Alan’s Commute

45 min

25 min

20 min

25 min

30 min

Alan’s Commute

45 min

25 min

20 min

25 min

30 min

Alan’s Commute

5

2 (tie)

1

2 (tie)

Client Access

50%

80%

70%

85%

75%

Client Access

50%

80%

70%

85%

75%

Client Access

5

2

4

1

3

Office Services

A

B

C

A

C

Office Services

A

B

C

A

C

Office Services

1 (tie)

3

4 (tie)

1 (tie)

4 (tie)

500 sq ft

950 sq ft

700 sq ft

Office Size

500 sq ft

950 sq ft

700 sq ft

Office Size

2

3 (tie)

5

1

3 (tie)

$1,500

$1,900

$1,750

Monthly Cost

$1,500

$1,900

$1,750

Monthly Cost

4

2

1

5

3

Office Size Monthly Cost

800 sq ft 700 sq ft $1,850

$1,700

800 sq ft 700 sq ft $1,850

$1,700

4

Rank alternatives on each objective Look for Dominated Alternatives

Rank alternatives on each objective Look for Dominated Alternatives

Rank alternatives on each objective Look for Dominated Alternatives

Alternatives Objectives Parkway Lombard Baranov Montana Pierpoint

Alternatives Objectives Parkway Lombard Baranov Montana Pierpoint

Alternatives Objectives Parkway Lombard Baranov Montana Pierpoint

Alan’s Commute

5

2 (tie)

1

Client Access

5

2

4

Office Services

1 (tie)

3

4 (tie)

Office Size

2

3 (tie)

5

Monthly Cost

4

2

1

4

Alan’s Commute

1

3

1 (tie)

4 (tie)

1 5

2 (tie)

5

2 (tie)

1

Client Access

5

2

4

Office Services

1 (tie)

3

4 (tie)

3 (tie)

Office Size

2

3 (tie)

5

3

Monthly Cost

4

2

1

4

Alan’s Commute

1

3

1 (tie)

4 (tie)

1 5

2 (tie)

5

2 (tie)

1

2 (tie)

4

Client Access

5

2

4

1

3

Office Services

1 (tie)

3

4 (tie)

1 (tie)

4 (tie)

3 (tie)

Office Size

2

3 (tie)

5

1

3 (tie)

3

Monthly Cost

4

2

1

5

3

8

Rank alternatives on each objective Look for Dominated Alternatives

Rank alternatives on each objective Look for Dominated Alternatives

Rank alternatives on each objective Look for Dominated Alternatives $50 = 150 square feet

Alternatives Objectives Parkway Lombard Baranov Montana Pierpoint

Alternatives Objectives Parkway Lombard Baranov Montana Pierpoint

Alternatives Objectives Parkway Lombard Baranov Montana Pierpoint

Alan’s Commute

5

2 (tie)

1

2 (tie)

4

Alan’s Commute

45 min

25 min

20 min

25 min

30 min

Alan’s Commute

45 min

25 min

20 min

25 min

30 min

Client Access

5

2

4

1

3

Client Access

50%

80%

70%

85%

75%

Client Access

50%

80%

70%

85%

75%

Office Services

1 (tie)

3

4 (tie)

1 (tie)

4 (tie)

Office Services

A

B

C

A

C

Office Services

A

B

C

A

C

Office Size

2

3 (tie)

5

1

3 (tie)

Office Size

500 sq ft

950 sq ft

700 sq ft

Office Size

500 sq ft

950 sq ft

700 sq ft

Monthly Cost

4

2

1

5

3

Monthly Cost

$1,500

$1,900

$1,750

Monthly Cost

$1,500

$1,900

$1,750

Now look for “even swaps” Objectives

$1,850

Montana

Objectives

20 min

25 min

Alan’s Commute

80%

70%

85%

Office Services

B

C B

A B

Office Size

700 sq ft

500 sq ft

$1,700

$1,500 $1,750

Client Access

Monthly Cost

$1,700

Now look for “even swaps”

25 min

Alan’s Commute

Lombard Baranov

800 sq ft 700 sq ft

$1,850

$1,700

Now look for “even swaps”

Montana

Objectives

25 min

20 min

25 min

Alan’s Commute

80%

70%

85%

Office Services

B

C B

A B

950 sq ft

Office Size

700 sq ft

500 sq ft

$1,900 $1,800

Monthly Cost

$1,700

$1,500 $1,750

Client Access

Lombard Baranov

800 sq ft 700 sq ft

Lombard Baranov

Montana

25 min

20 min 25 min

25 min

80%

70% 78%

85%

Office Services

B

C B

A B

950 sq ft

Office Size

700 sq ft

500 sq ft

950 sq ft

$1,900 $1,800

Monthly Cost

$1,700

$1,500 $1,750

$1,900 $1,800

Client Access

9

Now look for “even swaps” Objectives

Montana

Objectives

25 min

20 min 25 min

25 min

Alan’s Commute

80%

70% 78%

85%

Office Services

B

C B

A B

Office Size

700 sq ft

500 sq ft

950 sq ft

$1,700

$1,500 $1,750

$1,900 $1,800

Alan’s Commute Client Access

Monthly Cost

Lombard Baranov

Now look for “even swaps”

Now look for “even swaps” Objectives

Lombard Baranov 20 min 25 min

25 min

80%

70% 78%

85%

Office Services

B

C B

A

Office Size

700 sq ft

500 sq ft

950 sq ft

$1,700

$1,500 $1,750

$1,900 $1,850

Client Access

Monthly Cost

Montana

Objectives

25 min

20 min 25 min

25 min

Alan’s Commute

80%

70% 78%

85%

Office Services

B

C

A

Office Size

700 sq ft

500 sq ft

950 sq ft

$1,700

$1,500 $1,750

$1,900

Client Access

Monthly Cost

Do we see any more dominated alternatives?

Lombard Baranov

Montana

25 min

20 min 25 min

25 min

80%

70% 78%

85%

Office Services

B

C B

A

Office Size

700 sq ft

500 sq ft

950 sq ft

$1,700

$1,500 $1,750

$1,900

Client Access

Monthly Cost

Do we see any more dominated alternatives?

Montana

25 min

Alan’s Commute

Lombard Baranov

Now look for “even swaps”

B

Objectives Client Access Office Size Monthly Cost

Lombard Baranov

Montana

Objectives

80%

70% 78%

85%

700 sq ft

500 sq ft

950 sq ft

Office Size

$1,700

$1,500 $1,750

$1,900 $1,800

Monthly Cost

Client Access

Lombard Baranov

Montana

2

3

1

2

3

1

1

2

3

10

Do we see any more dominated alternatives?

Objectives

Lombard Baranov

Client Access Office Size Monthly Cost

2

One more pass at even swaps…

Montana

Objectives

1

Client Access

3

2

3

1

Office Size

1

2

3

Monthly Cost

Lombard Montana 80%

85%

700 sq ft

950 sq ft

$1,700

$1,800

One more pass at even swaps…

Objectives Client Access Office Size Monthly Cost

Lombard Montana 80%

85%

700 sq ft 950 sq ft $1,700

950 sq ft $1,800

One more pass at even swaps…

Objectives

Lombard Montana

Client Access

80%

85%

Office Size

700 sq ft 950 sq ft

950 sq ft

Monthly Cost

$1,700 $1,950

$1,800

Practical Advice

Make the easiest swaps first

11

Concentrate on the amount of the swap

Value an incremental change based on what you start with

Weighted Scoring

Practice makes perfect

Seek out information

“Must” criteria are absolute and can not be weighted

12

“Must” criteria are absolute and can not be weighted

First, establish Importance Scores for each “want” objective

Next, establish Achievement Scores for each alternative on each objective

Do not include any “must” criteria in this analysis

Alan’s Office Decision Weighted Scoring Finally, calculate weighted score for each alternative

Alternatives Objectives Parkway Lombard Baranov

Montana

Pierpoint

Alan’s Commute

45 min

25 min

20 min

25 min

30 min

Client Access

50%

80%

70%

85%

75%

Office Services

A

B

C

A

C

500 sq ft

950 sq ft

700 sq ft

$1,500

$1,900

$1,750

Office Size Monthly Cost

800 sq ft 700 sq ft $1,850

$1,700

Establish Importance Scores

Objectives

Importance Score

Alan’s Commute

5

Client Access

10

Office Services

3

Office Size

7

Monthly Cost

8

13

Establish Achievement Scores

Objectives Alan’s Commute Client Access Office Services Office Size Monthly Cost

Parkway Lombard Baranov 45 min 25 min 20 min 2 8 10 50% 80% 70% 3 8 5 A B C 10 7 3 800 sq ft 700 sq ft 500 sq ft 8 7 5 $1,850 5

$1,700 9

$1,500 10

Calculate weighted scores for each alternative

Montana 25 min 8 85% 10 A 10 950 sq ft 10

Pierpoint 30 min 6 75% 6 C 3 700 sq ft 7

$1,900 3

$1,750 7

Decision Statement “What is the best human resource information system for our company?”

Parkway

Lombard

Baranov

Montana

Selecting an HRIS

Pierpoint

IS

AS

Total

AS

Total

AS

Total

AS

Total

AS

Total

Alan’s Commute

5

2

10

8

40

10

50

8

40

6

30

Client Access

10

3

30

8

80

5

50

10

100

6

60

Office Services

3

10

30

7

21

3

9

10

30

3

9

Office Size

7

8

56

7

49

5

35

10

70

7

49

Monthly Cost

8

5

40

8

64

10

80

3

24

7

56

Total Score

166

254

224

264

204

Must Objectives • Regional EEO reporting • Producing management reports • Capturing & reporting salary & job history

Want Objectives • • • • •

Able to implement in 6 months Written in “C” OSHA reporting capability “Turn-Around” Document capability Security

14

Evaluate alternatives against must criteria Co. A

Must Objectives

Co. B

Co C

Assign weights to want objectives (importance scores)

Co. D

EEO Reports

Yes – Go Yes - Go Yes - Go Yes - Go

Mgmt Reports

Yes - Go Yes - Go Yes - Go No – No Go Yes - Go Yes - Go Yes - Go

Capture & Report History

Weights

Want Objective

Weight

Co. “A”

Score

Co. “B”

Score

Co. “C”

Score

6 months to implement Written in “C”

10

6 Mons. to complete

10

Yes- 6 months

9

Yes - ?

8

Yes – 4 months

10

9

Written in “C”

9

9

Yes- no subs req.

10

8

Yes – subs + req.

8

OSHA reporting

Yes – subs required

OSHA Reporting

8

Yes -Most flexible

10

Yes – Minimum

8

Yes - OK

9

Turn-around document Security

5

Turn around

5

Yes Best

10

Yes minimum

8

Yes - OK

9

3

Security

3

Yes Best

10

Must do ourselves

5

Limited security

7

Criteria

GO/NOGO GO/NOGO GO/NOGO GO/NOGO

Evaluate alternatives against want criteria (achievement scores)

Calculate total weighted scores Coordinator requests response

Want Objective

Weight

Co. “A” Score

Weighted Score

Co. “B” Score

Weighted Score

Co. “C” Score

Weighted Score

6 Mons. to complete

10

9

90

8

80

10

100

Written in “C”

9

9

81

8

72

10

90

OSHA Reporting

8

10

80

8

64

9

72

Turn around

5

10

50

8

40

9

45

Security

3

10

30

5

15

7

21

Total

331

271

328

Scoring Group Decisions: Delphi Method

Coordinator receives individual responses

Delphi Method

Coordinator determines: (a) Median response (b) Range of middle 50% of answers Coordinator requests explanations from any expert whose estimate is not in the middle 50% Coordinator sends to all experts: (a) Median response (b) Range of middle 50% (c) Explanations

15

Delphi Method: Strengths

Flexible

Iterative

Allows time to think before commitment

Ensures anonymity

Removes personal influence

16

Delphi Method: Weaknesses

Extreme sensitivity

High rates of attrition

Monetary payments may bias results

Assumes experts will reform judgments

Risk of “specious” consensus

17

Time consuming

The Rogue Division Case

The Rogue Division Case

Delphi Technique: Weighted Scoring

See Delphi schedule

No, now we need to look at uncertainty & risk

Are we done yet?

18