Mini-course 1 Decision Analysis (Dr. Mariya Sodenkamp) / Class 5 / ITB_L5_ 2015_04_27
.pdfAgenda
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Decision Hierarchies
Analy3c Hierarchy Process Method
Project Announcement
IT in Business: Decision Analysis| © Sodenkamp |
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elements
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Hierarchy
Levels
Clusters
How to structure decision elements?
Standard MCDA Hierarchiy
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Ai |
Decision Alternatives |
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w |
= f (w , pCj ) |
C j |
Decision Criteria |
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Ai |
Cj Ai |
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wCj |
Criteria Weights |
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i = 1,..., I; j = 1,..., J |
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pCjAi |
Performance of Alternatives on the Criteria |
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wAi |
Utility of Alternatives |
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(Advanced) IT in Business | © Sodenkamp |
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How to structure decision elements?
Generalized Criteria Hierarchiy
(Advanced) IT in Business | © Sodenkamp |
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Business / Marketing:
Hierarchy for determining consumer preference
A firm wants to determine consumer preferences for the three different kinds of paper towel.
The attributes are softness, absorptiveness, price, size, design and integrity. The three kinds of paper towels, X, Y and Z are evaluated.
Product desírability
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Softness |
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Absorptivene |
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Price |
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Size |
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Design |
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Integrity |
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X |
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Source: T.L. Saaty
Business /
Hierarchy
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Finance |
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Production |
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Marketing |
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Economics |
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• Tax Rate |
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• Labor |
• Company Image |
• Unemployment |
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• Fixed costs |
• Product Image |
• Inflation |
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Exchange Rate |
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• Transport |
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• GDP |
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• Tariffs |
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Mexico
Source: T.L. Saaty
Business / Management:
Hierarchy for Evaluating a Division’s Performance
There are several dimensions of the performance of a division in a corporation.
The principal dimensions to be considered in this evaluation are government dealings, management, imports and customers. There are several factors for each dimension. Level 3 of the hierarchy shows those pertaining to management alone; other factors can be similarly included for the other dimensions.
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Overall Division Performance |
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Source: T.L. Saaty |
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Government |
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Management |
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Imports |
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Customers |
Employee |
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Market |
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Material |
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Quality |
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Research |
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Safety |
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Startegy |
Productivity |
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Performance |
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share |
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Productivity |
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Division A |
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Division B |
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Division C |
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Political decision: Evaluation of candidates to the EU *
The EU is a geo-political and economic community covering a large portion of the European continent. It was founded upon numerous treaties and has undergone several expansions taking it from its six founder states to twenty-seven member states. To join the EU, a country must go through an extensive screening process and conform to a series of fairly demanding criteria established by the European Council in Copenhagen. The Copenhagen criteria require a stable democracy which respects human rights and the rule of law (political standard); a functioning market economy capable of competition within the EU (economic standard); and the acceptance of the obligations of membership, including EU law (community standard).
Decision makers are required to consider a vast amount of information concerning the objective and subjective criteria in their decision process. Currently, official status of candidate states have Croatia, Former Yugoslav Republic of Macedonia, and Turkey; potential candidates are Albania, Bosnia and Herzegovina, Kosovo, Montenegro, and Serbia. The three groups of Copenhagen Criteria are composed of 38 criteria divided into 169 sub-criteria.
The screening process is intended to determine how well a candidate state is prepared to join the EU. The Commission issues a report to the Council on the screening of the political, economic and community standards. This leads to open negotiations or a requirement that the candidate state must first meet these benchmarks. It is the responsibility of the European Council to determine whether the candidate state has fulfilled the Copenhagen criteria.
* Source: Tavana, M., Sodenkamp, M. and Suhl, L. (2010). A Soft Multi-Criteria Decision Analysis Model with Application to the
European Union Enlargement. Annals of Operations Research, Vol. 181, No. 1, pp. 393-421.
Guarantee of Democtacy and Rule of Law
• Parliament |
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• Government |
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• Civilian oversight
of the • forces
• Judicial |
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• Anti- |
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corruption |
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policy |
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Serbia |