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Exercises 65
all of the ‘benefit attributes’. She is then asked to imagine that each
attribute could be switched to its best possible value and asked to
rank the attractiveness of these possible switches. Her ranks are
given as:
Rank Switch
1 Lowest maximum loan facility to highest
2 No telephone banking facility to existence of this facility
3 Non-availability of small business adviser to availability
4 Least close branch to closest branch
(a) SMARTER has been used to obtain scores to represent the
aggregate benefits of the banks and these are given below:
Bank Aggregate score
Central 35.4
Northern 62.5
Direct 83.5
Royal 29.0
Marks 30.6
Show how the score of 35.4 for the Central bank was determined.
(b) Explain why it was appropriate to consider swings (or switches)
from the worst to best positions on each attribute when determining
the weights of the attributes.
(c) By taking into account the estimated annual charges of the
banks, determine which banks lie on the efficient frontier.
Explain the significance of the efficient frontier.
(d) SMARTER is based on the ‘principle of heroic approximation’.
Explain how this principle applies to your analysis of the
businesswoman’s problem and discuss whether it is likely to
be appropriate.
(8) A food company has to buy a new packaging machine and the list of
possible machines has been reduced to five: the Allstar, Belle, Cardigan,
DRT and Ellton. The decision on which machine to buy will
be based on five attributes: (i) costs, (ii) the quality of the after-sales
service provided by the supplier (AFTER SALES), (iii) the extent
to which the supplier will customize the machine to meet the specific
needs of the food manufacturer (CUSTOMIZATION), (iv) the
earliest date when the machine can be delivered (DELIVERY) and
(v) the machine’s reputation for reliability (RELIABILITY).