Logical Decisions - Classweb
Logical Decisions - Classweb Logical Decisions - Classweb
On the other hand, the weights of the different measures, the interactions between them, and your attitudes towards risk are inherently subjective. Reasonable people can have disagreements on these subjects. You can't generally eliminate these subjective parts of a decision. LDW provides methods for logically dealing with both the objective and subjective parts of a decision while keeping them well separated. The types of decisions that you can address using LDW might best be described as “Choices.” A choice has the following characteristics: ! You will select among a finite set of alternatives. ! All of the choices are “feasible,” meaning that you could actually choose each one if you wanted. ! No evaluation measures have levels that are unacceptable. ! You need to consider at least two evaluation criteria simultaneously. ! You will choose an entire alternative at a single time. That is, you won’t choose part of an alternative now and the rest of it later. Many decisions don’t meet one or more of these caveats, meaning that LDW may not be the best tool to analyze them. For example, optimization problems such as the best mix of products to produce at an oil refinery have a practically infinite number of possible product mixes (alternatives). These types of problems are often addressed by tools such as linear programming. Another example is multi-stage decisions, such as a new product introduction. In these problems you might want to make a preliminary decision to do test marketing and then decide later about a full product rollout based on the test results. These types of problems are often analyzed with tools such as decision trees and influence diagrams. 9-2 Section 9 -- In Depth
A third example is a portfolio decision, where you will be selecting a set of alternatives subject to budgetary and other constraints. You can analyze these types of problems with LDW in conjunction with Logical Decisions® Portfolio. The decision analysis method for choices can be described by the following steps: 1) Identify the alternatives to be ranked. 2) Clarify the goals and objectives that should be met by choosing the top-ranking alternative. 3) Identify measures to quantify how well the alternatives meet the goals and objectives. 4) Quantify the level for each measure for each alternative. 5) Quantify preferences about different levels of the measures. 6) Rank the alternatives by combining information from steps (4) and (5). 7) Do "sensitivity analysis" to see the effects on the results of changes in measure levels or preferences. LDW makes it easy to follow these steps and automates the tedious portions of the method. The following sections describe how to do each of the above steps using LDW. For more information about the details of using LDW, see sections 6 through 8, Using LDW; sections 4 and 5, Tutorials; and section 11, Commands Reference. If you have not yet worked through the Tutorial, doing so after you read this section will be helpful. Identifying and Describing Alternatives Alternatives are the choices you are ranking in order to come to a decision. They can be any set of objects or courses of action you must choose between. They can be cars or trucks to buy, colleges to attend, employees to hire, or lifestyles to lead. Section 9 -- In Depth 9-3
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A third example is a portfolio decision, where you will be<br />
selecting a set of alternatives subject to budgetary and other<br />
constraints. You can analyze these types of problems with LDW<br />
in conjunction with <strong>Logical</strong> <strong>Decisions</strong>® Portfolio.<br />
The decision analysis method for choices can be described by the<br />
following steps:<br />
1) Identify the alternatives to be ranked.<br />
2) Clarify the goals and objectives that should be met by<br />
choosing the top-ranking alternative.<br />
3) Identify measures to quantify how well the alternatives<br />
meet the goals and objectives.<br />
4) Quantify the level for each measure for each alternative.<br />
5) Quantify preferences about different levels of the<br />
measures.<br />
6) Rank the alternatives by combining information from<br />
steps (4) and (5).<br />
7) Do "sensitivity analysis" to see the effects on the results<br />
of changes in measure levels or preferences.<br />
LDW makes it easy to follow these steps and automates the<br />
tedious portions of the method. The following sections describe<br />
how to do each of the above steps using LDW. For more<br />
information about the details of using LDW, see sections 6<br />
through 8, Using LDW; sections 4 and 5, Tutorials; and section 11,<br />
Commands Reference. If you have not yet worked through the<br />
Tutorial, doing so after you read this section will be helpful.<br />
Identifying and Describing Alternatives<br />
Alternatives are the choices you are ranking in order to come to a<br />
decision. They can be any set of objects or courses of action you<br />
must choose between. They can be cars or trucks to buy, colleges<br />
to attend, employees to hire, or lifestyles to lead.<br />
Section 9 -- In Depth 9-3
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