R4. Tradeoffs and concessions.pdf

1 staiting from the worst case 45 million 400 days

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1 StaIting from the worst case ($4.5 million, 400 days, quality 5), if you have the choice of improving one factor from the worst to the best level, let' s suppose that you would most prefer to improve the cost factor first, the time factor second, and the quality factor third. This reflects the ordinal ranking of the weights. Suppose, fmther- more, that you would be indifferent between improving the cost 1. For a systematic discussion, see Keeney and Raiffa (1976).
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TRADEOFFS AND CONCESSlONS / 153 factor alone and improving both the time and quality factor together, Score reflecting the fact that.5 = .3 + .2. Using the exam analogy: getting (J the cost question perfect and the other questions completely wrong o CIl .... would be as desirable as getting the cost question completely wrong S' o and the others completely right. ~ :3 The cost jactor. The more you spend, the more important it is (1) p oq' o' '" that you save a given increment of money. Reducing your costs ::r- ... ::l CIl from $4.5 million to $4.0 million is just as important as reducing o ~ your costs from $4.0 million to $3.0 million, which accounts for the en ..... , o Q.. shape of your cost function. 2- SO ~ The time jactor. Improving the time value from 400 days down- ..., '" '!j ~ ward is not very important at first, but improvements become more ~. ¡::: Score important as the value goes from 350 days to 300; the re afte 1', the iil value of time reductions decreases (which accounts for the shape of to .... S11 to '" ~ 8 to:>o '" <:> '" your time function). rJJ (') o The quality jactor. Going from one quality index to the next is ::l, ::l ::1 ~ approximately worth the same as moving between any other two in- OQ 3 (JJ (1) 8 (JO oq' <b dices, except that quality index 2 is doser in value to quality index '< ::r- ~ (JO ..... ...,. S' (!) 1 than to quality index 3. :3 Q.. (JJ '" Roughly, the way to go about constructing any scoring system is O' c.., pj o '< ... ~ to formulate sorne rough guidelines, and then to tune the system by g:. .¡:.. manipulating numbers and curves and by testing the implied re- Ol 8 (!) sults. There are fancier and more systematic methods, but the task sr' (') Score should be approached in the same way one would grade an exam ... o ... .... , with several questions. If you are sol el y responsible for giving a '" .... grade and you don't have to explain your grading to anyone else or 8 to the student, then you might want merely to respond intuitively ...... to ::l ~ Q.. I aJ and impressionistically to the entire exam. But if you want someone (1) <b o oq' >< el se to do the grading for you, then sorne scoring system, even if it :r o ..... , (JJ is not perfect, can be a great help. A case can also be made for ..o ~ ¡:: adopting sorne formal system of grading even if you are not ac- to ~ countable to anyone and do not plan to delegate authority to an .... .¡:.. '< I to:> agent. A formal scheme of your own devising might help you de- '" cide how to grade each question separately and how to combine the ",'o scores of different questions.
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