Downloadable - About University

66 Decisions involving multiple objectives: SMART
The costs of the machines are given below, together with values
which the company’s production manager has assigned to them for
the non-monetary attributes (0 = worst, 100 = best).
Machine
Costs
($000)
AFTER
SALES CUSTOMIZATION DELIVERY RELIABILITY
Allstar 35 0 40 10 30
Belle 60 80 100 100 70
Cardigan 90 100 0 90 100
DRT 25 20 70 100 0
Ellton 50 80 100 0 90
(a) The values for the non-monetary attributes have been measured
on an interval scale. Use the values assigned to AFTER SALES
to explain what this means.
(b) The manager was asked to imagine a hypothetical machine
which has the worst characteristics of all the machines on the
non-monetary attributes. She was then offered the chance to
change one of this machine’s attributes to that of the best
machine on this attribute. After some thought, she decided
that she would most prefer to change RELIABILITY to the
best level. She considered similar changes in AFTER SALES,
CUSTOMIZATION and DELIVERY to be, respectively, 50%,
80% and 10% as desirable as the change in RELIABILITY. These
judgments were used to derive the following aggregate scores
for the non-monetary benefits of the machines.
Machine Allstar Belle Cardigan DRT Ellton
Score 26.25 83.33 66.25 31.67 87.50
(i) Show how the score for the Allstar machine was obtained.
(ii) By plotting the costs of the machines against their scores,
identify the machines that lie on the efficient frontier.
(c) Explain the role that sensitivity analysis could play in helping
the manager to reach a decision.
(9) The organizers of an international conference have to choose a hotel
that will be the conference venue. The organizers started with an
initial list of 40 possible hotels, but this has now been reduced
to a short list of five: the Alton, the Buttermere, the Castle, the
Dorset and the Elm. A value tree was used to identify the attributes
relating to the decision. These are (i) the cost of using the hotel,