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The main stages of the analysis 331
were bleak. The West region had only three outlets and the company had
been facing particularly stiff competition in this region from a rival firm.
In the East region there was an even smaller operation with only two
outlets, but this was known to be a potential growth area, particularly in
the light of the recent electrification of the main railway line to London.
To date, the most successful sales area, accounting for 50% of national
sales, had been the South. The company had a major operation here with
14 showrooms but, although the market in this region was buoyant,
planning regulations meant that there had been a problem in finding
suitable sites for the construction of new outlets.
The management of the company were planning their strategy for the
next five years and the main problem they faced was that of deciding how
the available resources should be allocated between the sales regions.
For example, should they reduce the number of outlets in the North and
reallocate the freed resources to the more promising East region? It was
resolved that the key managers involved should meet as a group with a
facilitator available to structure a decision analysis model of the problem.
The main stages of the analysis
The decision analysis approach to resource allocation problems involves
a number of stages, which we have summarized below to give an
overview of the process. It is important to note, however, that the
analysis rarely proceeds smoothly from one stage to the next. As a
greater understanding of the problem emerges it will often be found
necessary to return to earlier stages in order to make revisions to the
original model.
Stage 1: Identify the resources which are to be allocated, the areas
(variables) to which they can be allocated and the various
benefits which it is hoped this allocation will achieve.
Stage 2: Identify the possible strategies which are available for each
variable.
Stage 3: For each variable, assess the costs and benefits of the different
strategies.
Stage 4: Assess the within-criterion weights so that each benefit can be
measured on a common scale.
Stage 5: Assess the across-criteria weights which will enable the values
for the different benefits to be combined on an overall benefit
scale.