2STARTER VIDEO t Watch the video (right) on YouTube Question: ∥ in the video, and what does it tell us about decision-making in organisations / ě in the lecture EXAM CASE STUDY Provisional subject to confirmation We will use this case study in the exam t ě week read it before then 3 4 3TECHNICAL WORKSHOP UPDATE t ∥ ∥ Week 9 technical workshop (MCDA) is online now Week 8 technical workshop (systems modelling) to follow later this week What do you want to cover in the week 10 technical workshop WHAT WE LEARNED LAST WEEK Systems Modelling Summary You should understand the general idea of systems thinking how does it offer a different pattern of thought You should be able to create a baseline systems model for an organisation or business unit You should be able to work through all the modelling steps (including performance measures!) At the higher level, understand the different applications of systems modelling See week 8 tutorial resources + technical workshop to follow 5 6 4HOW IS OPERATIONAL RESEARCH DONE a typical project process ( ) Problem Situation X Problem Situation Y is expressed in facilitator and client PSMs leads to ModellingDecisions complex situation leads to changes involves key slide! LEARNING OUTCOMES Multi- ; ∥ ě Comprehension Demonstrate understanding of the theory and techniques taught on the module. For example, by explaining what is meant by systems thinking or CATWOE analysis Explain, for example, what the decision-making traps are, and how MCDA can help avoid them. Analysis Apply the theory and techniques taught on the module to real-world situation. For example, by showing how an OR practitioner would analyse a real-world problem presented in a case study, or by creating a CATWOE analysis for a fictional business Create an MCDA model for a short fictional case. Be able, for example, to select and weight criteria at multiple levels and explain why you made the technical choices you did. Be able to identify examples of decision-making traps in a case or article. Critical Evaluation Present a critical discussion of the theory and techniques taught on the module. For example, by offering critique of a real-world OR project presented in a case study, or by discussing the pros and cons of a technique such as rich picturing in the real-world context, based on your experience of applying the techniques, ideas from the literature and your own knowledge Discuss the pros and cons of MCDA. Explain what the limitations are, as well as the benefits. Offer a critical discussion of a real-world decision-making process by applying the concepts learned. + communication How they apply to this ∥ 7 8 5DECISIONS ARE DIFFICULT Decision analysis is needed more than ever WHY WHY ARE DECISIONS DIFFICULT (1) Complexity and uncertainty Some sources of complexity: Business Environment: Organisations operate in ě ě ∥ ;ZΘD interrelationships and dependencies Technological revolution: Quantity of data and speed of movement of information Subjectivity: Globalisation has brought together people from different cultural backgrounds with different worldviews Week 2 Reading d K 9 10 6WHY ARE DECISIONS DIFFICULT (2) Essential Reading The Decision-Making Traps Hammond, Keeney, Raiffa d , ěě d D , ě Business Review, Sep-Oct 1998 In addition, as human beings we are bound by the way the human brain works This creates further challenges that impact and distort our decision making The worst thing is: Many of us are not even aware of these challenges or > idea with an & ∥ Log in Socrative when Chris tells you to, and answer the 3 questions Can you avoid the decision-making traps DECISION-MAKING ACTIVITY Can you avoid the decision-making traps 2. Enter Room Number 898902 11 12 7DECISION-MAKING ACTIVITY > z Z The same question, framed differently generates answers that ě WHAT ARE DECISION-MAKING TRAPS D , The Real World Heuristics h cope with the complexity ě Hammond et al d ∥ Chris 13 14 8 Can take the form of: A statistic (as in the quiz) A verbal comment DECISION-MAKING TRAP 1 Anchoring t ě ě the mind gives disproportionate weight to the first information it Hammond et al ∥ ě ∥ A long-term strategy A member of staff An investment position (below) DECISION-MAKING TRAP 2 Status Quo ^ ∥ represents, in most cases, the safer course because it puts us Hammond et al Ackoff ^ commission vs. sins of omission 15 16 9OTHER DECISION-MAKING TRAPS From Hammond et al The Sunk-Cost Trap The Confirming-Evidence Trap The Framing Trap Estimating and Forecasting Traps Forewarned is forearmed! Ideas for guarding against these Learn about the traps and develop awareness of the way we think Employ tools to externalise and test our thinking One such tool is MCDA MCDA model from week 9 technical workshop INTRODUCTION TO MCDA Basic Purpose During an OR project, you may reach a point where the client is faced with a set of options One approach is to compare each option against an agreed set of criteria in order to select the most promising option The criteria will be chosen by the client and will reflect their values and aspirations We call this approach Multi-Criteria Decision Analysis (MCDA) 17 18 10 EXAMPLE Anatomy Of An MCDA Model Factory Location Decision Options Criteria Weight Scores Rank Calcs + additional analyses MCDA PROCESS 6 Main Steps Identify Options1 Select / Structure Criteria2 Set Criteria Weights3 Score Options4 Analyse Results5 Conduct Sensitivity Analysis6 19 20 11 IDENTIFY OPTIONS Step 1 Option A Option B Option C Option D Question: Where should we hold the company conference SELECT / STRUCTURE CRITERIA (1) Step 2 Question: What criteria might be relevant Catering Location Facilities 21 22 12 SELECT / STRUCTURE CRITERIA (2) Step 2 Cost of hiring the hotel Transportation links Quality and range of conference facilities Quality of accommodation Quality of catering service Staff experience and level of service Availability of informal meeting places Overall feel of the general environment Location of Hotel Environment Transportation links (access) Hotel Facilities Staff Conference rooms Informal meeting places Accommodation Catering Cost of hiring Concept of hierarchy / levels SET CRITERIA WEIGHTS Step 3 Criteria 1st Level Weights 2nd Level Weights Location 0.35 – Environment 0.5 – Access 0.5 Facilities 0.45 – Staff 0.1 – Conference rooms 0.3 – Meeting places 0.15 – Accommodation 0.2 – Catering 0.25 Costs 0.2 =1 =1 =1 23 24 13 SCORE EACH OPTION (1) Step 4 Criteria A B C D Location – Environment 0 25 40 100 – Access 100 80 35 0 Facilities – Staff 100 80 40 0 – Conference rooms 75 100 50 0 – Meeting places 25 100 0 75 – Accommodation 80 100 0 90 – Catering 60 70 0 100 Costs 5 0 100 60 SCORE EACH OPTION (2) Step 4 Option A: Location (2nd level): 0(0.5) + 100(0.5) = 50 Facilities (2nd level): 100(0.1)+75(0.3)+25(0.15)+80(0.2)60( 0.25) = 67.3 Cost: N/A at 2nd level Overall (1st level): 50(0.35) + 67.3(0.45) + 5(0.2) = 48.8 Easily done in Excel – 25 26 14 ANALYSE RESULTS (1) Step 5 Spot the calculation error here Compare to spreadsheet on my.wbs ANALYSE RESULTS (2) Step 5 Examining the 1st Level Criteria Option B performs Well at a high cost Option A has similar Cost to B but loses Out on facilities Option D is good All-round choice Option C is cheap But performs poorly 27 28 15 CONDUCT SENSITIVITY ANALYSIS Step 6 Experiment with different weights and observe impact 05-08 Warm-Up Quiz 08-15 Intro From Chris 15-45 MCDA Activity What Job To Do After Uni 45-55 Feedback / Plenary Something Tic Tok Star TUTORIAL PLAN Multi-Criteria Decision Analysis + attendance! : After Uni Financial Analyst Masters / PHd Barista 29 30 16 WARM UP QUIZ Multi-Criteria Decision Analysis 2. Enter Room Number 898902 3-4 minutes! 31
2STARTER VIDEO t Watch the video (right) on YouTube Question: ∥ in the video, and what does it tell us about decision-making in organisations / ě in the lecture EXAM CASE STUDY Provisional subject to confirmation We will use this case study in the exam t ě week read it before then 3 4 3TECHNICAL WORKSHOP UPDATE t ∥ ∥ Week 9 technical workshop (MCDA) is online now Week 8 technical workshop (systems modelling) to follow later this week What do you want to cover in the week 10 technical workshop WHAT WE LEARNED LAST WEEK Systems Modelling Summary You should understand the general idea of systems thinking how does it offer a different pattern of thought You should be able to create a baseline systems model for an organisation or business unit You should be able to work through all the modelling steps (including performance measures!) At the higher level, understand the different applications of systems modelling See week 8 tutorial resources + technical workshop to follow 5 6 4HOW IS OPERATIONAL RESEARCH DONE a typical project process ( ) Problem Situation X Problem Situation Y is expressed in facilitator and client PSMs leads to ModellingDecisions complex situation leads to changes involves key slide! LEARNING OUTCOMES Multi- ; ∥ ě Comprehension Demonstrate understanding of the theory and techniques taught on the module. For example, by explaining what is meant by systems thinking or CATWOE analysis Explain, for example, what the decision-making traps are, and how MCDA can help avoid them. Analysis Apply the theory and techniques taught on the module to real-world situation. For example, by showing how an OR practitioner would analyse a real-world problem presented in a case study, or by creating a CATWOE analysis for a fictional business Create an MCDA model for a short fictional case. Be able, for example, to select and weight criteria at multiple levels and explain why you made the technical choices you did. Be able to identify examples of decision-making traps in a case or article. Critical Evaluation Present a critical discussion of the theory and techniques taught on the module. For example, by offering critique of a real-world OR project presented in a case study, or by discussing the pros and cons of a technique such as rich picturing in the real-world context, based on your experience of applying the techniques, ideas from the literature and your own knowledge Discuss the pros and cons of MCDA. Explain what the limitations are, as well as the benefits. Offer a critical discussion of a real-world decision-making process by applying the concepts learned. + communication How they apply to this ∥ 7 8 5DECISIONS ARE DIFFICULT Decision analysis is needed more than ever WHY WHY ARE DECISIONS DIFFICULT (1) Complexity and uncertainty Some sources of complexity: Business Environment: Organisations operate in ě ě ∥ ;ZΘD interrelationships and dependencies Technological revolution: Quantity of data and speed of movement of information Subjectivity: Globalisation has brought together people from different cultural backgrounds with different worldviews Week 2 Reading d K 9 10 6WHY ARE DECISIONS DIFFICULT (2) Essential Reading The Decision-Making Traps Hammond, Keeney, Raiffa d , ěě d D , ě Business Review, Sep-Oct 1998 In addition, as human beings we are bound by the way the human brain works This creates further challenges that impact and distort our decision making The worst thing is: Many of us are not even aware of these challenges or > idea with an & ∥ Log in Socrative when Chris tells you to, and answer the 3 questions Can you avoid the decision-making traps DECISION-MAKING ACTIVITY Can you avoid the decision-making traps 2. Enter Room Number 898902 11 12 7DECISION-MAKING ACTIVITY > z Z The same question, framed differently generates answers that ě WHAT ARE DECISION-MAKING TRAPS D , The Real World Heuristics h cope with the complexity ě Hammond et al d ∥ Chris 13 14 8 Can take the form of: A statistic (as in the quiz) A verbal comment DECISION-MAKING TRAP 1 Anchoring t ě ě the mind gives disproportionate weight to the first information it Hammond et al ∥ ě ∥ A long-term strategy A member of staff An investment position (below) DECISION-MAKING TRAP 2 Status Quo ^ ∥ represents, in most cases, the safer course because it puts us Hammond et al Ackoff ^ commission vs. sins of omission 15 16 9OTHER DECISION-MAKING TRAPS From Hammond et al The Sunk-Cost Trap The Confirming-Evidence Trap The Framing Trap Estimating and Forecasting Traps Forewarned is forearmed! Ideas for guarding against these Learn about the traps and develop awareness of the way we think Employ tools to externalise and test our thinking One such tool is MCDA MCDA model from week 9 technical workshop INTRODUCTION TO MCDA Basic Purpose During an OR project, you may reach a point where the client is faced with a set of options One approach is to compare each option against an agreed set of criteria in order to select the most promising option The criteria will be chosen by the client and will reflect their values and aspirations We call this approach Multi-Criteria Decision Analysis (MCDA) 17 18 10 EXAMPLE Anatomy Of An MCDA Model Factory Location Decision Options Criteria Weight Scores Rank Calcs + additional analyses MCDA PROCESS 6 Main Steps Identify Options1 Select / Structure Criteria2 Set Criteria Weights3 Score Options4 Analyse Results5 Conduct Sensitivity Analysis6 19 20 11 IDENTIFY OPTIONS Step 1 Option A Option B Option C Option D Question: Where should we hold the company conference SELECT / STRUCTURE CRITERIA (1) Step 2 Question: What criteria might be relevant Catering Location Facilities 21 22 12 SELECT / STRUCTURE CRITERIA (2) Step 2 Cost of hiring the hotel Transportation links Quality and range of conference facilities Quality of accommodation Quality of catering service Staff experience and level of service Availability of informal meeting places Overall feel of the general environment Location of Hotel Environment Transportation links (access) Hotel Facilities Staff Conference rooms Informal meeting places Accommodation Catering Cost of hiring Concept of hierarchy / levels SET CRITERIA WEIGHTS Step 3 Criteria 1st Level Weights 2nd Level Weights Location 0.35 – Environment 0.5 – Access 0.5 Facilities 0.45 – Staff 0.1 – Conference rooms 0.3 – Meeting places 0.15 – Accommodation 0.2 – Catering 0.25 Costs 0.2 =1 =1 =1 23 24 13 SCORE EACH OPTION (1) Step 4 Criteria A B C D Location – Environment 0 25 40 100 – Access 100 80 35 0 Facilities – Staff 100 80 40 0 – Conference rooms 75 100 50 0 – Meeting places 25 100 0 75 – Accommodation 80 100 0 90 – Catering 60 70 0 100 Costs 5 0 100 60 SCORE EACH OPTION (2) Step 4 Option A: Location (2nd level): 0(0.5) + 100(0.5) = 50 Facilities (2nd level): 100(0.1)+75(0.3)+25(0.15)+80(0.2)60( 0.25) = 67.3 Cost: N/A at 2nd level Overall (1st level): 50(0.35) + 67.3(0.45) + 5(0.2) = 48.8 Easily done in Excel – 25 26 14 ANALYSE RESULTS (1) Step 5 Spot the calculation error here Compare to spreadsheet on my.wbs ANALYSE RESULTS (2) Step 5 Examining the 1st Level Criteria Option B performs Well at a high cost Option A has similar Cost to B but loses Out on facilities Option D is good All-round choice Option C is cheap But performs poorly 27 28 15 CONDUCT SENSITIVITY ANALYSIS Step 6 Experiment with different weights and observe impact 05-08 Warm-Up Quiz 08-15 Intro From Chris 15-45 MCDA Activity What Job To Do After Uni 45-55 Feedback / Plenary Something Tic Tok Star TUTORIAL PLAN Multi-Criteria Decision Analysis + attendance! : After Uni Financial Analyst Masters / PHd Barista 29 30 16 WARM UP QUIZ Multi-Criteria Decision Analysis 2. Enter Room Number 898902 3-4 minutes! 31