Preparation for Professional Practice

PPS-5: Decision Making

(Adapted from MPS 23, Don Woods 2003)

 

Pre-class assignment

  1. Read sections What is It?, New Concepts, Why Do It?, How to  Do It, and Learning Objectives
  2. Establish your Baseline on this skill on the Decision Making Feedback Form.
  3. Be able to describe two techniques for making decisions when called on in class

 

What is It?

A decision is selection of the best option from a number of choices.  It could be selecting the best material, the best job candidate, or the best hydraulic pump. 

 

Since we are talking about the best, we need to be able to evaluate our options.  For this, we use measurable criteria that are related to some defined goal.  Once we evaluate the options with respect to the criteria, the decision should make itself.

 

 

New Concepts

Cost/Benefit Analysis, Decision Table or Grid Analysis, Decision Tree

 

                                                               Why Do It?                                                              

Most of your engineering (and personal) life is a series of decisions and living with the consequences of those decisions.  You are taking this course as a consequence of those decisions.  With a clear goal, and measurable criteria, making decisions should be better.

 

How to Do It

Who makes the Decision?

It may seem obvious, but you need only make decisions with respect to areas in which you have control.  If you are asked to make a decision, be sure you have the authority to do so.  If you are asked to make a recommendation, your first cost/benefit analysis should be to check and see if the decision has already been made, or if the recommendation is likely to be followed.  If your input is of minimal influence, use your time appropriately.

 

Often, the decision will not be yours as an individual, and you will be working as part of a team, working group, or committee.  Then group dynamics (covered in other units) will also be important, and you will have to decide on a method for making the decision.  Three, of many possible methods, are briefly discussed below.

 

Cost/Benefit Analysis

Cost/Benefit Analysis is a fairly simple approach to making a decision.  You can total all the costs and benefits of each of your choices.  The choice with the lowest cost benefit ratio should be the winner.  This is easier if all of the costs and benefits can be expressed in a single form such as dollars.  If your decision involves multiple factors with different measuring systems, Cost/Benefit analysis is harder to apply quantitatively, but still useful. 

 

For example, you could compare the option of attending engineering school with the option of a two year program for skilled trades.  You could compare up-front costs vs. lifetime earnings fairly easily (even considering time value of money).  Harder to compare, would be factors like job satisfaction, autonomy, societal status.

 

Decision Table

The Decision Table or Grid Analysis allows you to numerically compare several options with respect to a number of criteria.  As a grid, it is a good fit for spreadsheet analysis.  The big problems are that you need to find a way to quantify the comparisons and you need to allow for criteria of different importance.

 

For example, suppose our goal is to get rid of a tree in the yard and our sub-goals are to 1) Preserve our health and property, 2) Achieve a neat stack of 18 inch firewood, 3) Maintain our funds by not spending a lot of money, and 4) have everything completed quickly.  After brainstorming our options are a) buy an ax and saw and do it by our self, b) buy a chainsaw and do it by our self, c) pay a tree service to do it.  After pricing the ax, chainsaw, and tree service, we fill out the table below. 

 

Note that we have to estimate the time that the do-it-yourself project will take.  Assume a 20 ft long 12 inch diameter trunk.  Assuming 15 minutes work and 10 minutes rest for each transverse hand saw cut yields about 6 hours of sawing time.  Add another 6 hours for the tree falling, branch cutting, and debris hauling and you have about 12 hours of time for the Ax and Saw approach.  We’ll also assume that the chain saw will cut our time in half.  Note that we are using some engineering estimation and some engineering intuition to get these numbers.  Depending on the importance of the decision, further investigation may be warranted.

 

 

Ax and Saw

Chainsaw

Tree Service

Health and property

Some Risk

Some Risk

They are bonded

Stack of Firewood

Will Do

Will Do

They will do

Money

$50

$200

$400

Time

12 hours

6 hours

Will take ½ day, two weeks from today

 

We can see that this chart isn’t giving us a whole lot yet.  We need to quantify the values in the cells in a way that we can compare.  Suppose we use a scale of 1-10 for each factor, with 10 being high or good.  For the Money factor we could say that10=$0 and 1=$400.  Likewise, for the Time factor we could say that two weeks=1 and 0 weeks=1.  In that case we can probably do our six hours in the space of half a week for a score of about 2.5.  With similar work for the other factors, our chart is now quantitative.

 

 

Ax and Saw

Chainsaw

Tree Service

Health and property

2

2

10

Stack of Firewood

5

5

5

Money

8

5

1

Time

5

2.5

10

Score

20

14.5

26

 

The Tree Service option is the winner in this, but we have not considered the relative importance of the criteria.  We may believe that Money is twice as important as Time, but that is not reflected in the score.  To account for relative importance, we can weight each criterion and use that weighting to multiply the score for that cell.  If Money is twice as important as Time, and the other two factors are half as important as Time, we get the following chart.

 

 

Ax and Saw

Chainsaw

Tree Service

            Criteria

wt

raw

adjust

raw

adjust

raw

adjust

Health and property

×1

2

2

2

2

10

10

Stack of Firewood

×1

5

5

5

5

5

5

Money

×4

8

32

5

20

1

4

Time

×2

5

10

2.5

5

10

20

Score

 

49

32

 

39

 

We see that Ax and Saw is the winner for the cheapskate.  Other weightings will give different results.  Some of you will see an opportunity there.

 

Decision Trees are another way of looking at cost vs. benefit of decisions.  Each decision can be viewed as a node from which the different possibilities branch.  Costs and benefits can be associated with each branch to quantitatively compare different choices.  http://www.public.asu.edu/~kirkwood/DAStuff/decisiontrees/

 

Decision Trees can also be used to deal with decisions that have risk.  Consider the earlier choice of the do-it-yourselfer with a new chainsaw.  Let’s narrow our comparison to the Costs of the Chainsaw vs. the Tree service.  We will assign a probability for the risk of injury with the chainsaw to be 1% and the cost of the injury (medical cost and lost wages) to $30,000.

 

Cost if

Accident
 

To understand the tree, consider the first Decision Node, Chainsaw or Tree Service.  If Chainsaw, we go up and left and hit a Chance Node at which point we could have an Accident (1% probability) or No Accident (99% probability).  The Accident for Chainsaw option would have a total cost of $30,000 while No Accident for Chainsaw has a cost of $200.  If we multiply the probability of Accident times the Cost of Accident we get $300.  This $300 represents the injury cost of this option.  Of, course, most of the time you will miss the injury cost, but if you make this decision enough times, the injury will happen.  Thus, the average injury cost per decision is $300.

 

For the Tree Service option, we need only consider the cost to us.  The Tree Service has their own insurance, and we can assume that their costs are built into their fees.  Even if they are not, we have no cost penalty for their accidents,

 

With the use of this diagram, we can see that a conservative decision maker would reassign the cost numbers in the Decision Matrix to reflect the cost associated with risk.  This is a big advantage of the Decision Tree approach.

 

Uncertainty

You may have noticed that we aren’t working with perfect information in these decisions.  We have to estimate costs, estimate probabilities, develop weighting schemes and develop comparative evaluation scales.  And you thought engineering was all deterministic equations and 12 significant figures.  Like much of life, you have to do the best you can with what you have.  The techniques listed above have significant benefit in organizing the incomplete information into a usable and understandable form.

 

People Issues

There are two significant people issues that should be addressed

When you look into your partner’s eyes on your honeymoon, you don’t say “I think I made a mistake” or “Perhaps Chris would have been a better choice”.  You’d better say “I am so happy to be here with you.”  Likewise, in your engineering choices, you have to make a commitment and be positive.  As the decision maker, you have to also sell your choice.

 

Decisions often involve change, and most humans don’t particularly like change (especially the old guys in your plant).  There are a number of ways to help with change that we don’t have space to go into here, but at minimum, do one thing.  If the people who will be affected by the decision weren’t part of the decision, they should be told about it by you, in person.  This is a time to share your vision and listen to their concerns.  You don’t have to solve all their problems, but you should listen.  Even if they never become enthusiastic supporters, they will respect you for showing up.

 

 

 

Learning Objectives

You should be able to:

  1. Define and give examples of terms listed in New Concepts
  2. Select options and criteria for a Decision Matrix
  3. Apply the Decision Matrix approach to make a design choice
  4. Apply the Decision Tree to deal with risk of a choice

 

 

In-Class

Exercise 1 (5 min.): As part of a small group, list the costs and benefits of one of the following:

·         attending Rose-Hulman

·         joining a fraternity/sorority

·         selecting engineering as a major

·         getting married

 

Exercise 2 (8 min.): As part of a small group, consider the freshman at a party trying to decide if they should partake of alcohol while underage.  Develop a decision tree for the choice that shows results of choices (decision nodes) and includes possible results (risk nodes).  Quantify risks and assign values to costs and benefits.

 

Decision Making Feedback Form

 

Name _______________________                     

 

1.       At the outset of this unit, place a “B” in each category to indicate your self assessment of your initial, or baseline skill level.

2.       At the end of the unit place an “A” in each category to indicate your self assessment of your skill level after practicing the skill.  Be prepared to provide documentation for your assessment.

 

Novice

(less successful)

Beginner

(shows few expert behaviors)

 

(1-2)

Good Start

(some expert behavior)

(3-4)

Getting There

(many   expert behaviors)

(5-6)

Almost There

(mostly expert behavior)

(7-8)

Expert

(shows all expert behavior)

 

(9-10)

Expert

(more successful)

Make decisions with comparing options to criteria

 

 

 

 

 

Decisions flow from options and criteria

Apply options and criteria but without a formal structure.

 

 

 

 

 

Use formal techniques like Decision matrix, Decision Tree, or Cost Benefit analysis

Unable to consider risk as a factor in decisions

 

 

 

 

 

Can use decision tree to address risk.

 

 

Reflection

What did I learn from this?

 

 

 

 

Which of the skills do I do pretty well?  (List Evidence)

 

 

 

 

Which skills could use some work? (List Evidence)

 

 

 

 

PPS-5  Making Decisions

Assignment 1 - Individual

 

Use a decision matrix to select the “best” of three preset living arrangements for you.  Use the criteria you developed in PPP-2  Assignment 2.  Suppose that your only choices are 1) shared apartment off campus, 2) shared dorm room on campus, and 3) fraternity house on campus.

 

Task

  1. Develop weighting values for each criterion from PPP-2, Assignment 2
  2. Create a Decision Matrix from the given options (columns) and the criteria developed in PPP-2 (rows)
  3. Develop quantifiable scales for each criterion, and rate each option with respect to each criterion
  4. Complete the matrix and total the raw and adjusted columns

 

 

Turn in:

On a plain white or engineering problems paper (neatly handwritten or typed)

  1. A statement of the problem
  2. Lists of the options and the criteria
  3. Description of the quantifiable rating scale for each criterion
  4. A completed decision matrix
  5. The best option

 

 

 

 

 

Evaluation:

1. Generated issues

Excellent (10)  - 7-10  good issues listed in Achieve, Preserve, Avoid categories

Mediocre (5)  - < 3-4 good issues,

Weak (0) -  no issues

2. Placed in categories of Must, Want, Not, People

Excellent (10) – Issues were in appropriate categories

Mediocre (5)  - some Issues were in appropriate categories

Weak (0) – missing or all incorrect categories

3. Criteria were Measurable

Excellent (10) – All four criteria were measurable

Mediocre (5)  - Some criteria were not easily measurable

Weak (0) – Criteria were not measurable

 

PPS-5   Decision Making

Assignment 2: Group Task

 

In PPP-2, Assignment 2, your group developed criteria for your particular design issue.  In this assignment, you will use those criteria to select a best design choice from your brainstormed list

 

Task

  1. Select the best 3-5 of your brainstormed solutions to use as your options
  2. Develop weighting values for each criterion from PPP-2, Assignment 2
  3. Create a Decision Matrix from those options (columns) and the criteria developed in PPP-2 (rows)
  4. Develop quantifiable scales for each criterion, and rate each option with respect to each criterion
  5. Complete the matrix and total the raw and adjusted columns

 

 

Turn in:

On a plain white or engineering problems paper (neatly handwritten or typed)

  1. A statement of the problem
  2. Lists of the options and the criteria
  3. Description of the quantifiable rating scale for each criterion
  4. A completed decision matrix
  5. The best option

 

Evaluation:

Options, Criteria, and Decision Matrix

Excellent (10 pts) –  Complete, neat matrix with clear criteria, options, and results

Mediocre (5 pts) – Mostly complete, less tidy matrix with less clear criteria, options, and results

Weak (0 pts) - Matrix missing, mostly incomplete or not understandable

 

Criteria and Rating schemes

Excellent (10 pts) –  Clear, believable, quantitative rating schemes for each criterion

Mediocre (5 pts) – some rating schemes not clear, believable, or quantitative

Weak (0 pts) - all rating schemes unclear, unbelievable, qualitative