Managerial decision-making

Distribution of decision-making: • The number of criteria:

– One-criteria decision making– Multicriteria decision making

• Methods of measurement criteria:– Nominal– Ordinal– Absolute

Deterministic decision(decision-making under conditions of certainty)

Procedure for multi-criteria decision making:

• It is based on the selection of the most suitable option for two or more interchangeable variants using two or more evaluation criteria.

1. Create a model - in the form of decision matrices.

2. Determining the importance weights (intensity perception) of the individual criteria.

3. Aggregation evaluationAggregation criteria and importance weights

Illustrative Example: - multicriteria selection

options• Ad1. Creating a model

Variant Criterion

K1: power per liter

(kW/l)

acceleration time

(O→200) km/h(s)

Breaking distance

(100→O) km/h(m)

V1: BMW M3 CLS 81,6 16,8 33,3

V2: Porsche 911 GT3

77,8 15,1 37,6

Vz: average 79,7 15,95 35,45

PowerBreaking distance

Order of variants

Zrychlení

BMW Porsche

The decision-making model

Ad2. Determining the importance weights

• methods:OrderScoring (classification)Paired comparisons

Order Method to determine the importance of the criteria weights

Importance of the criteria using two "experts" E1, E2.

Expert K1 K2 K3 ∑

E1 1 2 3 6

E2 1 3 2 6

Hi nonstandard

weight

2 5 5 12

Vi normalized

weight

2/12 5/12 5/12 12/12=1

Scoring (classification) method Scoring scale:

5,1n

Expert K1 K2 K3 ∑

E1 2 4 5 11

E2 1 5 3 9

Hi nonstandard

weight

3 9 8 20

Vi normalized

weight

3/20 9/20 8/20 20/20=1

The method of paired comparisons:Preferential arrangements such as:E1: K3 > K2 > K1; E2: K2 > K3 > K1

K1 K2 K3 ∑ K1 K2 K3 ∑ Vi

K1 X 0 0 0 K1 X 0 0 0 0

K2 1 X 0 1 K2 1 X 1 2 (1+2) / 6 = 0,5

K3 1 1 X 2 K3 1 0 X 1 (2+1) / 6 = 0,5

Ad3. Aggregation of the evaluation criteria and the importance weights: Determine sequence variants

• The method of sequence functions (aggregation)The method of scoring (aggregation)Method basic (aggregation)

The method of sequence functions (aggregation) weights for these criteria: V1 = 0; V2 = 0,5; V3 = 0,5;

K1 K2 K3 Hi1 ∙ V1 Hi2 ∙ V2 Hi3 ∙ V2 Wt order

V1 2 1 2 0 1,5 1,5

V2 1 2 1 0 1,5 1,5

5,01 5,02

5,02 5,01

inconclusiveresult!

The method of scoring (aggregation)– for the same weight

points K1 (kW/l) K2 (s) K3 (m) Variant K1 K2 K3 Wt order

1 <70 - 75> <18 - 17> <38 -37>

V1 3 2 5 3,5 1.2 (75 - 80> (17 - 16> (37 - 36>

3 (80 - 85> (16 - 15> (36 - 35>

V2 2 3 1 2 2.4 (85 - 90> (15 - 14> (35 - 34>

5 (90 - 95> (14 - 13> (34 - 33>

Basic Method (aggregation)

Variant

↓ coefficients →

h1 = Vi / Vb(Revenues criterion

type (better larger value)

h2 = Vb / Vi(cost type criteria

(better smaller value)

h3 = Vb / Vi(cost type criteria

(better smaller value)

V1 1,0238 0,9494 1,0646

V2 0,9762 1,0563 0,9428

Wt1 = 0 + 0,5 ∙ 0,9494 + 0,5 ∙ 1,0646 = 1,007 … first in the order

Wt2 = 0 + 0,5 ∙ 1,0563 + 0,5 ∙ 0,9428 = 0,9428 … second in the

order