Week 10

“Decision Making

Methods 2”

Dr Ramesh Vahidi r.vahidi@soton.ac.uk

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Southampton Business School

5th May 2022

 

 

From DM Methods 1: We identified ‘Problems’ and tried to ‘Structure’ them …

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Depending on the context and our purposes: “Problems could also be found and some aspects of them could be structured using: PESTEL, Stakeholders analysis, Success/Strategy/Governance theories and models, etc. or a combination of these as we discussed in one of this module’s lectures”

 

 

Aim of Week 10: Let’s Decide or Find Resolution

• Providing you with a few more common and

practical decision making and analysis

approaches/methods/tools, which could be

applied for further structuring, analysing and

resolving project decisions/problems.

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We will cover

• Part 1 → Single Criterion Decision Making

• Part 2 → Multi-criteria Decision Making

• Part 3 → Example of Scoring Model

• Part 4 → Another Scoring Model – Background to the next lecture

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PART 1

“Single Criterion

Decision Making”

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Southampton Business School

 

 

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– It is a new book published for the first time and is only on Amazon;

– There are only few suppliers.

– The suppliers’ prices, delivery periods and country of origin are the same.

– The suppliers’ reviews/credits differ only very slightly.

You have several options (suppliers) on Amazon for buying a book that you need urgently. How will you choose one of those if:

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Single Criterion Decisions & Decision Making

Decisions that you might have a few options but they

differ only on one aspect.

So you only need to compare them based on one criteria

(or aspect) for selecting the desired/best/viable option.

 

 

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Are most of the decisions in

your daily life single-criterion

decisions?

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PART 2

“Multi-Criteria

Decision Making

(MCDM)”

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Southampton Business School

 

 

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Decision: You are the project manager for “Selecting and purchasing the security systems for the Olympics athletes and volunteers’ accommodations”.

The potential suppliers have suggested two systems with various levels of security at very different prices.

Limitations: Allocated budget at most covers one of the cheapest and one of the most expensive systems (not two expensive systems) at a time.

There will be very good rewards for coming under budget and heavy penalties for going over budget (if possible at all!).

Assume you have the following options for your purchase, which one you would choose:

1) I will choose the cheaper for both accommodations;

2) I will choose the cheaper for athletes and the more expensive for volunteers;

3) I will choose the more expensive for the athletes and the cheaper for volunteers;

4) I have problem with making this decision!

5) I don’t wish to manage this project!

Question: Could you suggest a single criterion for choosing the most appropriate option?

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In the Olympics accommodation

for Athletes/Volunteer what

were your other criteria for

choosing the best option? (if

you had a choice to add!)

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A Decision with Multiple Criteria

Question1: In previous exercise, what were your other criteria for choosing the best option? (if you had a choice!)?

Cost, recording memory of the camera, distance and scope it covers, ease of repairs/replacement, suppliers’ reputation, guarantee, installation time, athletes’ satisfaction, volunteers’ satisfaction, risk of choosing each camera, athletes’ and volunteers’ insurances, human life, equality, ethics, …

Question2: How could these criteria and their relevant data help you in choosing the best option? (What will happen if you ignore these in reality?)

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1) Converting all the criteria into monetary (cost and benefit) equivalents.

Questions:

– How do you evaluate the athletes/volunteers satisfaction in monetary terms?

– How do you evaluate potential injuries/threats to life in monetary terms?

*Limited application in PM decisions, specially dealing with humans/soft aspects!

2) Combining all the different criteria regardless of their nature.

Questions:

– How to deal with the criteria that are non-convertible or hard to convert to monetary or quantitative equivalents?

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Approaches to Decisions with Multiple Criteria

 

 

Two main approaches

– Scoring models

– Hierarchical models

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Approaches to Decisions with Multiple Criteria

 

 

Ranking Criteria with a Typical Scoring Model

• Decision criteria: identifies what makes you choose an alternative E.g. → Cost, level of security, suppliers’ reputation, athletes’ satisfaction, volunteers’ satisfaction, installation time, …

• Desirability of an alternative:

1) How far that criteria is important for us? E.g. → is it all about: the cost, the level of satisfaction, the time it takes or a combination of these? To what extent …

2) How far it can satisfy a criteria? E.g. → how much, to what level of satisfaction, how long it takes …

• Steps after defining the problem and alternatives:

1. Define the decision criteria.

2. Identify the weight for each criterion.

3. Calculate each alternative’s score.

4. Prioritize alternatives.

5. Select the alternative with highest score. MANG6312©RameshVahidi2022

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PART 3

Example of Scoring Model

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Decision Analysis with Scoring Model

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Options

Opt1 Opt2

Criterion Importance of Criteria

Weight (0-10)

Rating (0-1)

Score Rating (0-1)

Score

CR1

CR2

CRn

Decision: Selecting between Option 1 and Option 2

How important is CR1 in making the decision?

(Within a scale of 1-10)

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How far Opt1 can satisfy this criterion?

(0 do not satisfy – 1 fully satisfy)

What is the score of Opt1 in relation to CR1?

Weight x Rate = Score

Example Scale for weighting the criteria

Very Important Important Not very

important Not

Important

Example Weights 10 6 3 0

 

 

Example of Decision Analysis with Scoring Model: Heathrow T5 – As was originally made

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Options

No Test Test

Criterion Importance Weight

0-10 Rating

0-1 Score

Rating 0-1

Score

Cost saving Not very important

3 0.8 3×0.8=2.4 0.5 3×0.5=1.5

Time saving Very important 10 1 10 0.1 1

System Quality

Not very important

3 0.7 2.1 1 3

Customer Satisfaction

Important 6 0.9 5.4 1 6

Reputation Very important 10 0.9 9 1 10

28.9 21.5

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