Decision Making Techniques Decision Making

Decision Making Techniques

Decision Making Tools and Techniques

There are several decision-making tools and techniques that help one in the workplace to make the best decisions possible with the information one has available. Using these techniques: grid analysis, paired comparison, and cost -benefit analysis, a company can find the likely consequences of decisions, and understand the importance of several variables in the decisions so that it can select the best decision (Carlsson and Walden, 1995).

Here, we describe paired comparison analysis technique for the decision making, as it is a widely popular technique of decision making in the workplace. In the paired Comparison Analysis, decision makers weigh the importance of a number of options and compare them relative to each other. This kind of technique is very useful when a company does not have the accurate and precise objective measures of the cost and benefit. Therefore, in these circumstances, paired comparison technique can be a better decision-making technique.

The simple idea in this technique is either to select the most important problem to solve, or select a solution that will provide the greatest advantage to the company. Thus, paired Comparison Analysis helps a workplace to set priorities straight where there are conflicting demands on your resources (Saaty, 1990).

In using this technique, first, the decision-makers list all of the options; then draw a grid with each option as both a row and a column header. Next, the decision makers use this grid to compare each of the options with each of the other options, one-by-one. Finally, the decision makers look for the best decision from each of the compared options, and then assign a score to show how much more important it is. In choosing the best decision, the decision makers add the importance of these comparisons in percentage terms so that each option is given a percentage importance.

In sum, a decision maker follows following steps to use the paired comparison technique:

List the option for the comparison.

1. Set up a grid with these options as row and column headings.

2. Cross out the cells on the grid where one option is compared with itself.

3. Cross out those cells on the grid where a comparison is duplicative.

4. Within the remaining cells compare the option in the row with the one in the column. For each cell, decide which of the two options is more important. Write down the letter of the more important option in the cell, and score the difference in importance from 0 (no difference) to 3 (major difference).

5. Finally, consolidate and sum the results by adding up the total of all the values for each of the options; and then convert these values into a percentage of the total score.

As a simple example, a business is looking at several ways to expand its market share. In doing so, it comes with the following options as shown below:

1. Use electronic commerce for serving customers

Expand business in home markets

3. Improve customer satisfaction

4. Improve the quality of service

Firstly the manager draws up the Paired Comparison Analysis table in Figure 1:

Figure 1: Example Paired Comparison Analysis Table (not filled in):

Use electronic commerce (a)

Expand into home markets (B)

Improve customer

Satisfaction

Improve the quality of service

D)

Now manager compare options, writes down the letter of the most important option, and scores their difference in importance. An example of it is shown in figure 2:

Figure 2: Example Paired Comparison Analysis Table (filled in):

Use electronic commerce (a)

Expand into home markets (B)

Improve customer