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
Down Payment <= $20,000 Monthly payment <= $2,000 4 + Bedrooms 2+ baths Not downtown or over 45 minutes compute time to work Occupancy within 60 days

Must criteria analysis
House C
$19,500 $2,500

Then create your consequence matrix
House C
$19,500 $2,500

House A
$17,500 $2,000 4 2 30 minutes 45 days

House B
$16,000 $1,600 4 2 22 minutes 45 days

Musts
Down Payment <= $20,000 Monthly payment <= $2,000 4 + Bedrooms 2+ baths Not downtown or over 45 minutes compute time to work Occupancy within 60 days

House A
$17,500 $2,000 4 2 30 minutes 45 days

House B
$16,000 $1,600 4 2 22 minutes 45 days

FAIL

Wants
Minimum down payment Lowest monthly payment Location convenient to work Use present furnishing, drapes Shelter for 2 cars Public transportation near Convenient to schools Convenient to shopping, etc. Workshop & storage space Stable resale value

House A
$17,500 $2,000 Good Good Carport Bus .5 mile I mile Large Good

House B
$16,000 $1,600 OK Very good Garage Bus close .25 mile .5 mile Poor Good

Wants
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 risk- tax increase

House A
Good New Unfenced Good Yes Good Good High

House B
Excellent OK Fenced Good None Fair Average Low

Now start making trade-offs

3

Dominated Alternatives & Even Swaps

The Dominated Alternatives technique eliminates inferior alternatives.

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 Low cost Good weather Short travel time $450 Warm, possible rain 3 hours Getaway B $500 Warm & sunny 3 hours Getaway C $500 Cold Getaway D $450 Cool Getaway E $500 Cold

Weekend Getaway
Getaway A Low cost Good weather Short travel time $450 Warm, possible rain 3 hours Getaway B $500 Warm & sunny 3 hours Getaway C $500 Cold Getaway D $450 Cool Getaway E $500 Cold

3 hours

3 hours

2.5 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
Getaway A Low cost Good weather Short travel time $450 Warm, possible rain 3 hours Getaway B $500 Warm & sunny 3 hours Getaway C $500 Cold Getaway D $450 Cool Getaway E $500 Cold

Weekend Getaway
Getaway A Low cost Good weather Short travel time $450 Warm, possible rain 3 hours Getaway B $500 Warm & sunny 3 hours Getaway C $500 Cold Getaway D $450 Cool Getaway E $500 Cold

3 hours

3 hours

2.5 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
Alternatives Objectives
Monthly Salary
3
Moderate

Vincent’s Job Decision Consequence Table
Alternatives Objectives
Monthly Salary Schedule Flexibility Skills Development Vacation annual days Benefits Enjoyment
Job A Job B
$2,400

Job A
$2,000

Job B
$2,400

Job C
$1,800

Job D
$1,900

Job E
$2,200

Job C

Job D

Job E

1
Low

5
High

4
Moderate

2
None

3

$2,000

1 4 1

5 1 3 5 5

$1,800

4

$1,900

2 5 2

$2,200

Vincent’s decision

Schedule Flexibility Skills Development

Moderate

2 tie
Computer

4
Computer

1
Operations Computer

2 tie
Organizational

5
Multitasking Time Mgmt

2 tie 4 2 1

Low

High

Moderate

2 tie 5

None

Computer

4

1 Manage
People

3 5 5

5 1

2

Computer Manage People

Operations Computer

Organizational

Multitasking Time Mgmt

Vacation annual 2 days Benefits Enjoyment
1

14
Health, dental,

3 tie

12

10
Health

15

3 tie

12

14

12 3 tie
Health, dental

10

1 4

15

12 3 tie

retirement

2 Health, tie dental 3 tie Good

Health, 4 retirement

Health, 2 tie dental

retirement

Health, dental,

2 tie

Health

Health, retirement Great 1tie

2dental tie 5Boring

Health,

1 tie Great

3 tie

Good

1tie

Great

5

Boring

1Great tie

3Good tie

3 Good tie

5

Vincent’s Job Decision Consequence Table
Alternatives Objectives
Monthly Salary Schedule Flexibility Skills Development Vacation annual days Benefits Enjoyment
Job A Job B
$2,400

Vincent’s Job Decision Consequence Table
Alternatives Objectives
Monthly Salary Schedule Flexibility Skills Development Vacation annual days Benefits Enjoyment
Job A Job B
$2,400

Vincent’s Job Decision Consequence Table
Alternatives Objectives
Monthly Salary Schedule Flexibility Skills Development Vacation annual days Benefits Enjoyment
Job A Job B
$2,400

Job C

Job D

Job E

Job C

Job D

Job E

Job C

Job D

Job E

3

$2,000

1 4 1

5 1 3 5 5

$1,800

4

$1,900

2 5 2

$2,200

3

$2,000

1 4 1

5 1 3 5 5

$1,800

4

$1,900

2 5 2

$2,200

3

$2,000

1 4 1

5 1 3 5 5

$1,800

4

$1,900

2 5 2

$2,200

Moderate

2 tie 4 2 1

Low

High

Moderate

2 tie 5

None

Moderate

2 tie 4 2 1

Low

High

Moderate

2 tie 5

None

Moderate

2 tie 4 2 1

Low

High

Moderate

2 tie 5

None

Computer

Computer Manage People

Operations Computer

Organizational

Multitasking Time Mgmt

Computer

Computer Manage People

Operations Computer

Organizational

Multitasking Time Mgmt

Computer

Computer Manage People

Operations Computer

Organizational

Multitasking Time Mgmt

14

12 3 tie
Health, dental

10

1 4

15

12 3 tie

14

12 3 tie
Health, dental

10

1 4

15

12 3 tie

14

12 3 tie
Health, dental

10

1 4

15

12 3 tie

retirement

Health, dental,

2 tie

Health

Health, retirement Great 1tie

2 tie

Health, dental

retirement

Health, dental,

2 tie

Health

Health, retirement Great 1tie

2 tie

Health, dental

retirement

Health, dental,

2 tie

Health

Health, retirement Great 1tie

2dental tie 5Boring

Health,

1Great tie

3Good tie

3 Good tie

5Boring

1Great tie

3Good tie

3 Good tie

5Boring

1Great tie

3Good tie

3 Good tie

Even Swaps
1.Determine necessary change to cancel out objective Use even swaps to eliminate some objectives!
Cost of Airfare Frequent Flier Miles

Continental

United

Even Swaps
2.Assess what change in another objective would compensate for the change
Cost of Airfare Frequent Flier Miles

Continental

United

$900

$1,000

$900

$1,000

None

2,000

None

2,000

6

Even Swaps
3.Make the even swap
Cost of Airfare Frequent Flier Miles

Continental

United

Even Swaps
Cost of Airfare Frequent Flier Miles

Continental

United

Even Swaps
Cost of Airfare Frequent Flier Miles

Continental

United

$900

$1,000

$900

$1,000

$900

$1,000
$950

None

2,000

None

2,000

None

2,000

What are frequent flyer miles worth to you?

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

Even Swaps
Cost of Airfare Frequent Flier Miles

Continental

United

Even Swaps
Cost of Airfare Frequent Flier Miles

Continental

United

$900

$1,000
$850

$900

$1,000
$900

None

2,000

None

2,000

Let’s look at Alan’s office decision

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

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

7

Alan’s Office Decision

Rank alternatives on each objective

Rank alternatives on each objective

Alternatives Objectives Parkway Lombard Baranov Montana Pierpoint
Alan’s Commute Client Access Office Services Office Size Monthly Cost

Alternatives Objectives Parkway Lombard Baranov Montana Pierpoint
Alan’s Commute Client Access Office Services Office Size Monthly Cost

Alternatives Objectives Parkway Lombard Baranov Montana Pierpoint
Alan’s Commute Client Access Office Services Office Size Monthly Cost

45 min 50% A

25 min 80% B

20 min 70% C 500 sq ft $1,500

25 min 85% A 950 sq ft $1,900

30 min 75% C 700 sq ft $1,750

45 min 50% A

25 min 80% B

20 min 70% C 500 sq ft $1,500

25 min 85% A 950 sq ft $1,900

30 min 75% C 700 sq ft $1,750

5 5 1 (tie) 2 4

2 (tie) 2 3 3 (tie) 2

1 4 4 (tie) 5 1

2 (tie) 1 1 (tie) 1 5

4 3 4 (tie) 3 (tie) 3

800 sq ft 700 sq ft $1,850 $1,700

800 sq ft 700 sq ft $1,850 $1,700

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

Alternatives Objectives Parkway Lombard Baranov Montana Pierpoint
Alan’s Commute Client Access Office Services Office Size Monthly Cost

Alternatives Objectives Parkway Lombard Baranov Montana Pierpoint
Alan’s Commute Client Access Office Services Office Size Monthly Cost

5 5 1 (tie) 2 4

2 (tie) 2 3 3 (tie) 2

1 4 4 (tie) 5 1

2 (tie) 1 1 (tie) 1 5

4 3 4 (tie) 3 (tie) 3

5 5 1 (tie) 2 4

2 (tie) 2 3 3 (tie) 2

1 4 4 (tie) 5 1

2 (tie) 1 1 (tie) 1 5

4 3 4 (tie) 3 (tie) 3

5 5 1 (tie) 2 4

2 (tie) 2 3 3 (tie) 2

1 4 4 (tie) 5 1

2 (tie) 1 1 (tie) 1 5

4 3 4 (tie) 3 (tie) 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
Alan’s Commute Client Access Office Services Office Size Monthly Cost

Alternatives Objectives Parkway Lombard Baranov Montana Pierpoint
Alan’s Commute Client Access Office Services Office Size Monthly Cost

Alternatives Objectives Parkway Lombard Baranov Montana Pierpoint
Alan’s Commute Client Access Office Services Office Size Monthly Cost

5 5 1 (tie) 2 4

2 (tie) 2 3 3 (tie) 2

1 4 4 (tie) 5 1

2 (tie) 1 1 (tie) 1 5

4 3 4 (tie) 3 (tie) 3

45 min 50% A

25 min 80% B

20 min 70% C 500 sq ft $1,500

25 min 85% A 950 sq ft $1,900

30 min 75% C 700 sq ft $1,750

45 min 50% A

25 min 80% B

20 min 70% C 500 sq ft $1,500

25 min 85% A 950 sq ft $1,900

30 min 75% C 700 sq ft $1,750

800 sq ft 700 sq ft $1,850 $1,700

800 sq ft 700 sq ft $1,850 $1,700

Now look for “even swaps”
Objectives
Alan’s Commute Client Access Office Services Office Size Monthly Cost

Now look for “even swaps”
Objectives
Alan’s Commute Client Access Office Services Office Size Monthly Cost

Now look for “even swaps”
Objectives
Alan’s Commute Client Access Office Services Office Size Monthly Cost

Lombard Baranov
25 min 80% B 700 sq ft $1,700 20 min 70% C B 500 sq ft $1,500 $1,750

Montana
25 min 85% A B 950 sq ft $1,900 $1,800

Lombard Baranov
25 min 80% B 700 sq ft $1,700 20 min 70% C B 500 sq ft $1,500 $1,750

Montana
25 min 85% A B 950 sq ft $1,900 $1,800

Lombard Baranov
25 min 80% B 700 sq ft $1,700 20 min 25 min 70% 78% C B 500 sq ft $1,500 $1,750

Montana
25 min 85% A B 950 sq ft $1,900 $1,800

9

Now look for “even swaps”
Objectives
Alan’s Commute Client Access Office Services Office Size Monthly Cost

Now look for “even swaps”
Objectives
Alan’s Commute Client Access Office Services Office Size Monthly Cost

Now look for “even swaps”
Objectives
Alan’s Commute Client Access Office Services Office Size Monthly Cost

Lombard Baranov
25 min 80% B 700 sq ft $1,700 20 min 25 min 70% 78% C B 500 sq ft $1,500 $1,750

Montana
25 min 85% A B 950 sq ft $1,900 $1,800

Lombard Baranov
25 min 80% B 700 sq ft $1,700 20 min 25 min 70% 78% C 500 sq ft $1,500 $1,750

Montana
25 min 85% A 950 sq ft $1,900

Lombard Baranov
25 min 80% B 700 sq ft $1,700 20 min 25 min 70% 78% C B 500 sq ft $1,500 $1,750

Montana
25 min 85% A 950 sq ft $1,900

Now look for “even swaps”
Objectives
Alan’s Commute Client Access Office Services Office Size Monthly Cost

Do we see any more dominated alternatives?

Do we see any more dominated alternatives?

Lombard Baranov
25 min 80% B 700 sq ft $1,700 20 min 25 min 70% 78% C B 500 sq ft $1,500 $1,750

Montana
25 min 85% A B 950 sq ft $1,900 $1,850

Objectives
Client Access Office Size Monthly Cost

Lombard Baranov
80% 700 sq ft $1,700 70% 78% 500 sq ft $1,500 $1,750

Montana
85% 950 sq ft $1,900 $1,800

Objectives
Client Access Office Size Monthly Cost

Lombard Baranov
2 2 1 3 3 2

Montana
1 1 3

10

Do we see any more dominated alternatives?

One more pass at even swaps…

One more pass at even swaps…

Objectives
Client Access Office Size Monthly Cost

Lombard Baranov
2 2 1 3 3 2

Montana
1 1 3

Objectives
Client Access Office Size Monthly Cost

Lombard Montana
80% 700 sq ft $1,700 85% 950 sq ft $1,800

Objectives
Client Access Office Size Monthly Cost

Lombard Montana
80% 700 sq ft 950 sq ft $1,700 85% 950 sq ft $1,800

One more pass at even swaps…

Objectives
Client Access Office Size Monthly Cost

Lombard Montana
80% 700 sq ft 950 sq ft $1,700 $1,950 85% 950 sq ft $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

Seek out information

Weighted Scoring

Practice makes perfect

“Must” criteria are absolute and can not be weighted

12

“Must” criteria are absolute and can not be weighted Do not include any “must” criteria in this analysis

First, establish Importance Scores for each “want” objective

Next, establish Achievement Scores for each alternative on each objective

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

Alternatives Objectives Parkway Lombard Baranov
Alan’s Commute Client Access Office Services Office Size Monthly Cost

Montana 25 min 85% A 950 sq ft $1,900

Pierpoint 30 min 75% C 700 sq ft $1,750

45 min 50% A

25 min 80% B

20 min 70% C 500 sq ft $1,500

Establish Importance Scores

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

5 10 3 7 8

800 sq ft 700 sq ft $1,850 $1,700

13

Establish Achievement Scores

Calculate weighted scores for each alternative
Pierpoint 30 min 6 75% 6 C 3 700 sq ft 7 $1,750 7
Parkway IS Alan’s Commute Client Access Office Services Office Size Monthly Cost Total Score 5 10 3 7 8 AS 2 3 10 8 5 Total 10 30 30 56 40 166 Lombard AS 8 8 7 7 8 Total 40 80 21 49 64 254 Baranov AS 10 5 3 5 10 Total 50 50 9 35 80 224 Montana AS 8 10 10 10 3 Total 40 100 30 70 24 264 Pierpoint AS 6 6 3 7 7 Total 30 60 9 49 56 204

Selecting an HRIS

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

Montana 25 min 8 85% 10 A 10 950 sq ft 10 $1,900 3

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

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
Must Objectives EEO Reports Mgmt Reports Capture & Report History Co. A Co. B Co C Co. D

Assign weights to want objectives (importance scores)
Criteria 6 months to implement Written in “C” OSHA reporting Turn-around document Security Weights 10 9 8 5 3

Evaluate alternatives against want criteria (achievement scores)
Want Objective 6 Mons. to complete Written in “C” OSHA Reporting Turn around Security Weight 10 Co. “A” Yes- 6 months Yes – subs required Yes -Most flexible Yes Best Yes Best Score 9 Co. “B” Yes - ? Score 8 Co. “C” Yes – 4 months Yes- no subs req. Yes - OK Yes - OK Limited security Score 10

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

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

9

9

Yes – subs + req. Yes – Minimum Yes minimum Must do ourselves

8

10

8 5 3

10 10 10

8 8 5

9 9 7

Calculate total weighted scores
Coordinator requests response Want Objective 6 Mons. to complete Written in “C” OSHA Reporting Turn around Security Weight Co. “A” Score Weighted Score Co. “B” Score Weighted Score Co. “C” Score Weighted Score

10 9 8 5 3

9 9 10 10 10

90 81 80 50 30

8 8 8 8 5

80 72 64 40 15

10 10 9 9 7

100 90 72 45 21

Scoring Group Decisions: Delphi Method

Coordinator receives individual responses 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

Delphi Method

Total

331

271

328

15

Delphi Method: Strengths

Flexible

Iterative

Allows time to think before commitment

Ensures anonymity

Removes personal influence

16

Delphi Method: Weaknesses

Extreme sensitivity

Assumes experts will reform judgments

High rates of attrition

Monetary payments may bias results

Risk of “specious” consensus

17

Time consuming

The Rogue Division Case
Delphi Technique: Weighted Scoring

The Rogue Division Case
See Delphi schedule

No, now we need to look at uncertainty & risk

Are we done yet?

18