Single Choice Decisions

How To Choose The Best Alternative If Each Option Has Meaningful Pros And Cons?

Learn how to use MakeItRational Decision Making Software to evaluate alternatives (e.g. suppliers, projects, investments, locations, candidates, technologies, products, software) in context of multiple criteria and select the best option.

What Is a Single Choice Decision?

  • Company has one vacancy and many job candidates. How to select the best candidate?
  • Company plans to build a new factory and considers multiple locations. Only one location can be chosen. Which one?
  • Organization plans to implement an ERP system. How to evaluate which system will give the greatest benefits?
  • We are looking for a supplier of electronic components. We have received many offers but only one can be selected.
  • Management Board performs an internal recruitment for the position of a project manager. Which candidate should be chosen?

In all these situations, each option has meaningful pros and cons. We look for the best option, and we don’t care about an order of not chosen alternatives (not a ranking decision).

How To Make a Single Choice Decision?

MakeItRational implements Analytic Hierarchy Process (also known as AHP, Analytical Hierarchy Process, Analytic Hierarchical Process) which is one of the multi-criteria decision analysis methods.

As a result of AHP we get a prioritized list of alternatives. When making a single choice decision, we select the option with the highest priority. We don’t care about other priority values, although they may help us to understand and justify the choice.

Step 1. Building the List of Alternatives

We look for the best alternative and on the first step, we just define the list of possible choices, e.g.: suppliers, locations, projects, candidates

Step 2. Organizing the objectives

Identify the objectives and organize them into a hierarchy (from the general to specific ones). The objectives determine how we will evaluate alternatives. E.g. if we include "minimize cost" objective into the hierarchy then we will evaluate alternatives in this context. It is crucial to identify objectives that completely describe the decision context.

Typical objective can be described by a verb (to maximize, minimize, reduce, improve, increase) and a noun (time, quality, cost, reliability, user experience).

supplier selection criteria

Img. 1. Objectives hierarchy for supplier selection

Step 3. Determining the importance of objectives

If "Maximize product quality" is more important, than "Reduce delivery time" then the alternatives evaluation in the context of the former objective should have a greater impact on the result than the evaluation in a context of later.

We define the relative importance of criteria by comparing them in pairs. While group decision making everyone enters values individually and after that group selects common values by searching for consensus or average values.

Criteria comparisons with MakeItRational decision making tool

Img. 2. Criteria comparisons with MakeItRational decision making tool

 

Criteria weights calculated in MakeItRational decision making tool

Img. 3. Criteria weights calculated with MakeItRational decision making tool

Step 4. Evaluation of alternatives

Now, we evaluate how well specific alternatives satisfy objectives so we need information that allows to do this. Alternatives can be compared in pairs, but usually it is better to develop a rating scale for each criterion and evaluate alternatives according to the scale.

Tab.1. Exemplary scale for minimize cost
Cost [USD] Rate
< 10 000 5
10 000 - 15 000 4
15 000 - 17 000 3
17 000 - 18 000 2
18 000 - 22 000 1
> 22 000 0

 

Suppliers ranking in context of maximize product quality - MakeItRational decision making tool

Img. 4. Ranking in context of "Maximize product quality" - MakeItRational decision making tool

Step 5. Final ranking

When we done with evaluations we get the final ranking that aggregates relative importance of criteria and alternatives evaluations. When making a single choice decision we choose the alternative with the highest aggregated utility.

Final ranking of suppliers - MakeItRational decision making tool

Img. 5. Final ranking of suppliers - MakeItRational decision making tool

Step 6. Sensitivity analysis

We should also perform a sensitivity analysis of result to check how ranking behaves in response to changes in the relative importance of criteria. We are interested in scenarios when the first place in ranking changes as this is our result for single choice decision.

Sensitivity analysis

Img. 6. Sensitivity analysis. The first alternative in ranking changes when criterion weight increases by 17.5%.

 

Sensitivity analysis

Img. 7. Sensitivity analysis. Changes in criterion weight doesn't change the first alternative in ranking.

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