The criteria are not all equally important. It is necessary, therefore to allocate weights to the items listed in step 2 in order to give them their relative priority in the decision (step 3). A simple approach is merely to give the most important criterion a weight of 10 and then assign weights to the rest against that standard. Thus, in contrast to a criterion that you gave a, the highest rated factor would be twice as important. The idea is to use your personal preferences to assign priorities to the relevant criteria in your decision as well as indicate their degree of importance by assigning a weight to each. Exhibit lists the criteria and weights that our manager developed for her vehicle replacement decision. Price is the most important criterion in her decision, with performance and handling having low weights.
The Decision making Process:
Evaluation of decision effectiveness>>
Identification of a problem > Identification of decision criteria> Allocation of weights to criteria > Development of alternatives > Analysis of alternatives > Selection of an alternative > Implementation of the alternative
Criteria and Weights in car buying decision (Scale of 1 to 10)
Then decision maker lists the alternatives that could succeed in resolving the problem (step 4). No attempt is made in this step to appraise these alternatives only to list them. Let’s assume that our manager has identified 12 vehicles as viable choices: Toyota Corolla, Hyundai Accent, Opel Corsa, Mitsubishi Lancer, Honda City, Tata Indigo, Chevrolet Optra, Ford Fiesta, Maruti Baleno, Suzuki Grand Vitara, Skoda Octavia and Mahindra Scorpio.
Once the alternatives have been identified the decision maker must critically analyze each one (step 5). The strength and weakness of each alternatives become evident as they are compared with the criteria and weights established in steps 2 and 3. Each alternative is evaluated by appraising it against the criteria. Exhibit shows the assessed values that the manager put on each of her 12 alternatives after he had test driven each vehicle. Keep in mind that the ratings given the 12 vehicles shown in exhibit are based on the assessment made by the new product manager. Again, we are using a 1 to 10 scale. Some assessments can be achieved in a relatively objective fashion. Or instance the purchase price represents the best price the manager can get from local dealers, and consume magazines report data from owners on frequency of repairs. However, the assessment of handling is clearly a personal judgment. The point is that most decisions contain judgments. They are reflected in the criteria chosen in step 2, the weights given to the criteria and the evaluation of alternatives. The influence of personal judgment explain why two vehicle buyers with the same amount of money may look at two distinct sets of alternatives or even look at the same alternatives and rate them differently.
Exhibit is only an assessment of the 12 alternatives against the decision criteria; it dos not reflect the weighing done step 3. If one choice had scored 10 on every criterion you wouldn’t need to consider the weights. Similarly if the weights were all equal, you could evaluate each alternative merely by summing up the appropriate lines in Exhibit. For instance, the Lancer would have a score of 218, and the Skoda Octavia, a score of 224. If you multiply each alternative assessment against it weighs, you get the figures in Exhibit. For instance, the Ford Fiesta scored a 40 on durability which was determined by multiplying the weight given to durability (5) by the manager’s appraisal of Ford on this criterion (8).The summation of these scores represents an evaluation of each alternative against the previously established criteria and weights. Notice that the weightng of the criteria has changed the ranking of alternatives in our examples. The Honda City, for example, has gone from first to third. From our analysis, both initial price and interior comfort worked against the Honda.