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Robust Decision Making
Table of Contentss
Robust Decision Making 1
Decision Making Procedure: 2
Decision devising tools and their justifications: 2
Critical Evaluation: 5
Waveriders is a private owned company and industries leisure and ground forces boats. Waveriders is sing an chance of planing a new boat “ Sea Catch ” to pull more clients and to better provide the demands of its clients. Company has already spent ?2.5 million on the market research for design and development. The company is confronting a job in make up one’s minding either to purchase a new mill or non to purchase one. Another job faced by waveriders is to happen a suited location for its new mill to spread out its concern and the two options screened out are “ Lymington ” and “ Exmouth ” . Both the locations have some pros and cons. The company has besides some troubles in taking the right selling schemes and allotment of cost to different selling mediums.
Using different determination devising tools like Decision tree Analysis, Financial Analysis ( including Return on Investment, Calculation of Net present Value, Payback clip period ) , SWOT Analysis and Grid Analysis, the group proposed the company to go on the development of new merchandise “ Sea Catch ” and take “ Lymington ” as the production location. Cost allotment for different selling mediums was besides identified and Newspaper, Radio and Television seemed most appropriate mediums. After working on “ What ” and “ How ” portion, now this undertaking needs an reply to “ Why ” portion of warranting the pick of these tools and procedures. The aims of this assignment are:
To warrant the methodological analysis used in determination devising procedure.
To critically measure the picks.
Decision Making Procedure:
Decision doing procedure involves the undermentioned five stairss ( Anderson, Sweeney and Williams 2000 ) :
Identify the job.
Investigate the job.
Determine different standards to measure job.
Evaluation of different options.
Choose one option.
Using this procedure, job was foremost identified and so investigated into item and finding and rating of different standard was done utilizing different determination devising tools. The nature of the job is to place the most profitable options to prolong concern and its merchandises. Decision demands include an economical and executable way to run into the client demands and pull new clients. The information available is the gross revenues of different merchandises for the last four old ages and cost associated with different options.
Decision devising tools and their justifications:
The above analysis gave an thought about the nature of the job and with the given informations, relevant determination techniques were used. Based on more numerical figures given in informations, fiscal analysis was done in more item and to acquire the image clearer, determination tree and SWOT Analysis was made. The group decided to take most relevant and sound rating procedure to do the robust determination ( Guerra-Lopez, 2007 ; cited in Lopez and Thomas 2011 ) .
Decision Tree Analysis:
The chief ground behind utilizing determination tree analysis was its easy reading and the get downing point to acquire the image clear and seeable ( Berger et al 2004 ) and ( Tirenni et al 2007 ) . Another ground of taking determination tree analysis as a get downing point to the determination doing procedure was that this tool is used where jobs are consecutive and the later job depends on the earlier one ( Berger et al 2004 ) . Lapp was the instance in waveriders where taking an option would hold an impact on the other 1s. Decision trees are used to foretell the hereafter and presume the results ( Tirenni et al 2007 ) and the group predicted the hereafter of taking different locations based on their results.
The reading of determination tree is quiet easy ( Podgorelec, Kokol, Stiglic and Rozman 2002 ) . Using determination trees was utile and appropriate in this determination doing procedure of waveriders because here variables were dependent on one another and there was a clear relationship between variables therefore utilizing determination tree made it convenient to turn to the interactions between variables and it besides considers dependence ( Tirenni et al 2007 ) and this statement was besides supported by ( Gepp et al 2010 ) .
Effectiveness of this tool was supported by D’souza et Al ( 2007 ) saying that it helps in placing the best option to be chosen and determination tree addresses all the hazards associated with each way ( D’souza et al 2007 ) . In support to this hazard appraisal attack of this tool, Beger et Al ( 2004 ) said that “ Decision tree is a tool which is used to do determinations when hazard factor is at that place ” .
Confirmation prejudice did develop here and to minimise that prejudice, alternate methods were used like fiscal analysis and SWOT Analysis, listed below to acquire the consequences from different positions and no judgements were made in the beginning.
The chief ground behind utilizing fiscal analysis was to look into the cogency of the procedure and to do robust determination ( Calandro and Flynn 2007 ) . Fiscal analysis was conducted by the group to look into the feasibleness of the given options and based on different scenarios, the net nowadays value, discounted payback clip period and return on investing was calculated, because of the available informations and determination demand to acquire the most executable option. The ground of utilizing return on investing is to acquire the cost benefit analysis and make up one’s mind amongst options that which one is more profitable ( Erdogmus et al 2004 ) . Net Present value was used to compare two options holding same form of hard currency flows and same features ( Grinyer and Green 2003 ) . This fiscal planning facet was considered because it helps in doing good determinations based on nonsubjective measurings ( Gehring, 2013 ) . Even in fiscal planning, the fiscal analysis is given the most importance ( Gehring, 2013 ) . These quantitative methods were used to acquire grounds based and rational consequences ( Cooper et al. , 2001b ; Dickinson, Thornton, and Graves, 2001 ; cited in Kester, Griffin, Hultink and Lauche 2011 ) .
For the intent of fiscal analysis, different scenarios were considered including the choice of lymington and Exmouth in both instances of successful and unsuccessful paradigm. Multiple standards were used in the fiscal analysis process to simplify the determination devising procedure ( Suplee and Dzubow 2008 ) .
The above mentioned three indexs were used and to do right determination, leaden norm of all these indexs were calculated as they all play every bit of import function and determination was made on the accumulative norm of all these three indexs identified. The NPV for Lymington calculated was low but the accumulative norm of discounted payback clip period and ROI was good for Lymington as compared to Exmouth. The group decided to travel for Lymington on the footing of these numerical figures as determination demands needed a less hazardous way to bring forth net incomes, so less payback period and more return on investing seemed more executable to be given more importance.
This tool is used to place the possible way for an organisation and their current state of affairs can be described in a matrix which is divided into four quarter-circles i.e. Strengths, weaknesses, chances and menaces ( Ommani, 2011 ) . This tool was used by our group in placing the way for the waveriders to do a determination in taking the best location for production depending upon their SWOT Analysis. An advantage of SWOT Analysis is that it helps in acquiring penetration about the job and gives solutions to those jobs ( USDA, 2008 ; Nouri et Al, 2008 ; cited in Ommani, 2011 ) . This technique was used because it is easier to understand and gives a clear construction to calculate out the thoughts and do schemes consequently ( Piercy and Giles 1989 ) and ( Hill and westbrook 1997 ) .
An effectual usage of this SWOT Analysis was done by our squad by non merely categorising the information in that matrix but besides measuring those factors and delegating weight and mark to those factors to construe their comparative importance ( Course stuff 2013 ) .
The Evaluation matrices were used and they were divided in external and internal rating matrix where external rating matrix comprised of menaces and chances and this rating helped in making more consciousness about the environmental alterations and helped in identifying and managing hazard for different state of affairss. This facet of SWOT Analysis of making consciousness and hazard direction was supported by Ommani ( 2011 ) . The combination of both these internal and external rating matrices acted as a tool in explicating scheme ( Ommani, 2011 ) and enabled our group in developing a scheme to do right determination.
Waveriders was confronting a job in following the right selling scheme for the new merchandise and had to do determinations sing the cost allotment on different selling mediums to be used and to cipher their effectivity. So there were many options and no individual aim. The job demanded the usage of GRID Analysis as it can be used for taking between many options holding no individual aim ( Course stuff 2013 ) .
Using the GRID Analysis and puting the options on left border of the matrix and factors on the top, weights were assigned to different options for different factors hence a clear image of most attractive mediums were identified and harmonizing to the Analysis, Newspapers ranked at the top.
Beginning: hypertext transfer protocol: //www.mindtools.com/pages/article/newTED_03.htm
Biass can really rock the concluding behind many determinations and different types of prejudices can happen like verification prejudice consequences in the ignorance of all those facts that are opposite to or different to a individual ‘s ain perceptual experiences and another prejudice is the grounding prejudice in which more trust on one type of information consequences in colored determination ( Kahneman, Lovallo and Sibony 2011 ) . Our group analysis was both verification and ground tackle biased as it was entirely based on fiscal analysis and figures. To minimise the verification prejudice caused by determination tree, a more depth fiscal analysis was done to back up the determination. The SWOT Analysis was conducted but it was merely done to back up the fiscal analysis consequence hence an attack to find the importance of other impressions was non used. Even these prejudices can ensue in divergence from strategic determination devising ( Kahneman et al. 1982 ; Schwenk 1988 ; Stevenson et Al. 1990 cited in Busenitz and Barney 1997 ) .
Problems with execution of the tools:
Most of the determination doing techniques used by our group were quantitative in nature and based on Numberss and nonsubjective measuring. A exclusive independency on fiscal methods is criticized by Cooper et Al ( 2004a, 2004b, 2004c ) saying that companies who rely merely on fiscal methods perform worse than others ( Kester et al 2011 ) . Analysis was non conducted accurately as some figures were non given and without them, the reading of consequence was non accurate ( Blau et al. , 2004 ; Linton, Walsh, and Morabito, 2002 ; Poh, Ang, and Bai, 2001 ; cited in Kester et al 2011 ) . Specifically in the determination tree analysis where some values were losing and it does non give accurate consequences if some of import values are losing ( Podgorelec et al, 2002 ) and ( Blau et al. , 2004 ; Linton, Walsh, and Morabito, 2002 ; Poh, Ang, and Bai, 2001 ; cited in Kester et al 2011 ) .
Other tools that could hold been used:
Tools like Cost Benefit Analysis could hold been used to compare the picks and to cipher the border between given costs of both the options and their well-thought-of benefits. The option with the higher border could hold been analyzed as cost benefit analysis is suited when it is about comparing between picks and doing rating determinations ( Jonassen 2012 ) . AHP is a really effectual determination doing tool and could hold minimized the lacks of determination tree analysis as it can bring forth accurate consequences if some values are losing ( Saaty and Katz, 1990 ) . Using AHP could hold resulted in cut downing the prejudices as it observes the options from different determinations and there are less opportunities of doing a colored determination ( Course stuff 2013 ) . As the determinations were largely based on quantitative analysis, another job could hold been diagnosed by utilizing AHP as it gives a methodological analysis to mensurate both the qualitative every bit good as quantitative public presentations ( Vaidya and Kumar, 2006 ) .
In doing a robust determination, there are different determination devising tools associated and maximal utilizations of these tools give better consequences but their relevancy to the job is mandatory. The blend of qualitative and quantitative analysis is required to do good determinations. An appropriate usage of different determination doing techniques was made to do the robust determination for Waveriders. Though, there were some prejudices involved in the determination devising procedure but the facet of relevancy was at that place. These prejudices and jobs with proper execution of some tools could hold been ignored by utilizing more relevant and different nature of methodological analysiss. A better apprehension of different determination devising methodological analysiss is besides required to do better execution. The methodological analysis used by the group was appropriate to the current jobs faced by waveriders and identified consequences were supported by all methodological analysiss that were used. Their usage could hold been improved by implicating other relevant methodological analysiss or by extinguishing some prejudices involved.