Management
Management: Questions and Answers for Decision Analysis Course
Q2.1 Answer
- Objectives in this situation and some different alternatives are there:
The main objective behind purchasing of a car is to go to office and to fulfil homely affairs. In this situation, we needed budgeted family car to travel within the city. The objective of purchasing a new car is very specific as it is needed for limited purposes so in choosing the car there would be no problem.
- The broad context and objectives behind purchasing a car is as follows.
Budget Features Usage Choice After Sales Service
Total cost Size Inside the city Free services
Cost of Spare parts Speed Long journey Onsite or off site
Free gadgets Mileage Gear or without gear
Guarantee Engine type Colours available
Warrantee Safety features
Space
- Yes, the decision gets changed when horizon is broad behind purchasing a car and when it is changed when horizon is narrow in nature. Narrow horizon helped to purchase a car very easily. Whereas, broad horizon made it difficult to purchase a car and need various levels to finalize the decision.
Early Bird Inc.
Q1. Answer: The objectives of the Early Bird’s Inc. were to become a leader in the premium coffee market by selling coffee beans at lower prices than its close competitor New Morning. The complete plan of the Early Bird’s Inc. was to become a market leader with increase market share with the help of price cuts, aggressive promotions and provoking price wars. Also its aim is to adopt a differentiation strategy to earn a higher margin for more profits. This strategy will lead the Early Bird’s Inc. in a winner position, in the market. The idea behind lowering the prices of regular coffee beans is to attract more and more customers at their stores. Their idea also includes to attract them through their new handpicked premium coffee which plays a role of differentiator for them to compensate the loss.
Q2. Answer: The planning horizon of the Early bird’s Inc. must consider the external environment factors such as competitors’ strategy, a potential threat of a new entrant in the market and support from coffee growers in their decision. Considering no action from competitor to the company’s pricing strategy can result into a strategic blunder.
Q3. Answer: Company’s decision to follow the values by not cutting the margins of coffee growers are good decision, but the decision related to price cuts by bearing loss is not a good decision. Uncertain events may happen if competitor New Morning reacts to the decision of Early Bird’s price that cut by lowering their coffee’s price result into a strategic blunder. The problem in the decision is ignoring the competitor’s reaction.
Q4. Answer: A graphical representation of Early Bird’s Inc.
Residential Fire Sprinklers
Summary
This case study talks about the methodology used for quantitative treatment of variability and uncertainty in performance based engineering analysis and decision analysis used for residential fire sprinklers. Case talks about the use of performance based system which must consider many decisions to be made before implementing anything. Case discusses the various models of decision analysis proposed by various writers. For an example, three phase approach decision analysis cycle proposed by Carl-Axel S. Stael Von Holstein.
The best approach suggested in the case talks about the considering all kinds of complexities in the critical variables. It discusses and suggests the best method to overcome from the problem of fire by preparing better fire defence choices.
References
- Clemen, R.T. Making Hard Decisions An Introduction to Decision Analysis, Duxbury Press, 2004. Print.
- Clemen, R.T., Reilly, T. Elements of Decision Problems, Retrieved from http://www.seas.gwu.edu/~dorpjr/EMSE269/Lecture%20Notes/Chapter%202.pdf [27 January, 2014].
- Harris, R. Introduction to Decision Making Part 1, Retrieved from http://virtualsalt.com/crebook5.htm [27 January, 2014].
