Decision Making Tables

 Scenario:

Allison and James Stewart recently attended a birthday party for their 10-year-old granddaughter, Shirley. During the party, the children were all given a chance to make their own popcorn and add flavors and colors to the popped corn. The children could add caramel, butter, chili pepper, cocoa powder, or dried cheese flavoring. The girls were delighted with the idea of mixing the flavors to their taste, which in some cases were delightful and others not so much. The fun was in the mixing and the girls were delighted. Allison and James, recent retirees, were looking for a new small business to start and they immediately latched onto this idea: Why not produce popcorn flavors? On second thought why not produce snack flavors in general? Why not produce flavors for popcorn, pretzels, and potato chips that people could mix and match to their taste – A gourmet flavor treat for all ages. Flavor “N” Snack (FNS) was born.

FNS makes 18 powdered flavor basics that when heated in a microwave for seconds would add flavor to most snack foods. The powders come in flavors like masala, Thai green chili, honey and mustard, chili, malt vinegar and sweet flavors like orange chocolate, salty caramel, and honey apple. The flavors are packaged in plastic jars with shaker lids for easy dispensing. Online instructions for hosting tasting parties are included in the packaging.

Allison and James do all the product purchasing, mixing, bottling, labeling, packaging and shipping of the product in the basement of their large home. Their teenage grandson has created a web page for them and helps with online orders. Currently after six months in business FNS is selling about 875 bottles each month. The couple took the FNS products to a recent Sweets and Snack Expo in California and were surprised at the response received. They received a contract from several small boutique chains looking for clever food gift ideas. This contract will increase their output by about 300 bottles per month alone. They also learned from other conventioneers that the holiday season would give them a big jump in sales as people look for hostess gifts, stocking stuffers, party ideas, and gift guides for new ideas.  In fact, the conventioneers suggested the Stewarts increase their existing production as much three times. Allison and James can increase sales more if they increase production. Encouraged by positive reactions from the convention sales and a new listing posted in two national gift guides, the company’s July revenue was $6,500. FNS’’s gross margin ranged from $3 to $5 on each bottle, depending on the ingredients. At this time, the website is doubling its orders.

The holiday season is upon FNS and Allison and James are at a crossroads in their business. They cannot be sure the products will take off, but they want to be ready just in case. The idea of not having enough inventory for the season and disappointing customers is unsettling to James and Allison. The couple cannot be seen as unreliable to first-time customers. It is also true that keeping down expenses is critical because the company is self-financed and the couple does not want to touch their 401K pension funds to fund FNS.

Allison and James have studied the market and although uncertain that they will reach their sales goals it seems likely that to fill all their possible sales the couple would have to produce 6,000 bottles per month starting in September through December.

James estimates that he will need two additional full-time workers in October, mainly for production; an extra three and a half workers in November, for production and shipping; and one and a half workers in December, mainly for shipping. The couple has examined a few options to meet the huge increase in production:

One option they considered is asking friends and family to help in exchange for food and laughs. The problem is that other commitments may diminish the volunteers’ participation as the holidays, school schedules and work demands consume their time. They are likely not to be reliable as time nears the holiday week. Further, James and Allison know that family and friends cannot be managed like salaried workers, and hurt feelings may result.  Although the most cost-effective measure would cost $1800, easily payable from their bank account, Allison and James worry they may not meet the goal without losing some family or friends. Depending on family and friends is risky.

They could hire bonded and vetted temp-workers through an agency. The cost is $25 an hour for a total of $20,000. This sum would tap into their cash reserve and leave them strapped for other expenses. Although doable, this option leaves no cushion. It is a risk. The workforce is also not trained and would have to be coached as well as supervised on dealing with food products.

Another option is a bank loan. This could allow for a more professional workforce and free James and Allison to plan the company’s future growth.  However, the rates may be higher for people their age. Allison called AARP for some advice and was told that age should not be an issue from a legitimate lender; however they would most likely have to post collateral that means mortgaging their home, which is mortgage free. The house they feel is off limits. This is a strong no way option for them. They must have a place to live at their age. However, getting a loan without using the house or their 401K accounts as collateral is possible but they have no idea of the rates.

Another option is to invest in new equipment that would include turntables, workbenches, shrink wrap machines and fulfillment equipment that James thinks will cost $11,500.  He is uncertain that they will have enough time to install the machines in the basement in time for a September production.  He might have to pay extra for a rush fee of $3,000 more to guarantee a timely installation.  The cost is something FNS can handle without too much strain.

Looking for some advice, the couple turned to some of the small business people they met at the convention.  Here are some of the comments they received:

Use every personal contact as you must get the orders filled and to the customers on time.  The first impression is the best so do it right the first time.  Work 24/7. If you do not want to use family and friends look to other groups that may be willing to help for a small donation. You may even have previous work buddies who may help for a small fee.  Also include with every order a product list and order form. Happy customers make good long-term customers.

Do not invest in any equipment if you are not sure the holiday surge will continue in the months afterward.  Family and friends will want to see you succeed while temp workers will consider it just another job.

Investing in machinery is a real growth move.  Find customers that will sustain the expense by going to bigger retailers.

 

Decision Making Worksheet Instruction Steps

 

The PrOACT model of decision making uses five steps to help make difficult decisions.  PrOACT stands for problem, objective, alternatives, consequences, and tradeoffs. Use the following worksheet to document how the group applied steps of the PrOACT model in making the decision for the owners.

 

DIRECTIONS:

 

  1. Before starting this process read and review the course readings:

 

 

  1. In order to apply the model correctly, complete the worksheet step by step.

 

Students should ask the following questions in examining the explanation sections of this worksheet:

 

  • Was each of the steps of the model followed correctly?
  • How did the group come up with their conclusions (e.g. framing the decision, list of objectives etc.)?
  • Did we explain it in detail (e.g. was the way the process was applied by the group explained in each step)?
  • Did we use course material and case study facts to explain the reasoning behind the conclusions the group drew? Additional research?
  • Did we use in text citations to reference the material used to support the logic behind the conclusion?
  • Did we look at the grading rubric?

 

  1. Other information in addition to the directions associated with the project.

 

  • Third person writing must be used. Do not use statements such as “the group, I, the team, or the case study” in writing explanations.

 

  • Students are expected to treat the explanation sections of the worksheet similar to a college level research paper. The logic presented in the worksheet may not be considered as common sense. All explanations must be supported with a source and facts from the case study.

 

  • Use a cover page to include your name.

 

  • Be sure to support the ideas, reasoning and conclusions put forth using the course readings, additional research and in text citations. The case study facts do not require in text citations. List references at the end of the document.

 

  • Turn in the Worksheet only into the Assignment Submission Folder.

 

 

 

Step Three: Creating Alternatives

 

In creating alternatives, it is best to think outside the box to avoid the biases and influences that may be limiting your thinking. Key points in coming up with alternatives:

 

  • Come up with every possible alternative that would meet the objectives. Do not restrict the number of alternatives at first.

 

  • Being positive is important and helps to deflect the anchoring bias.

 

  • Alternatives require data collection, stakeholder objectives and an approach that is not problem solving-oriented.

 

As part of this process, clarify the uncertainties involved and the risk tolerance associated with each of the alternatives.

 

Uncertainties: What could happen in the future and how likely is it that it will occur?

 

Risk Tolerance: When decisions involve uncertainties, the desired consequence may not be the one that results. How much risk is acceptable?  Do you have a high tolerance for risk, a medium tolerance for risk or a low tolerance for risk? Please make sure you understand the definition of risk tolerance. Risk tolerance is NOT the level of risk but associated with how much risk is acceptable.

 

Read and View:

 

Alternatives: explanation of how the group applied the model to the case study
Fill in Here: The group will identify and detail at least 4 alternatives from the case study and 2 created by the group. Explain in detail how the group arrived at the list of alternatives. Go through the process covered in the Lifetools PrOACT Lesson Three in discussing why these alternatives were chosen and others not. Include any possible bias or influences that might have entered into the choice of alternatives by the decision maker as expressed in the group discussion. Identify the ideas that were discussed by the group and the reasons given to finally choose the alternatives listed. Make sure to explain how the model process was applied in the group’s process.

This explanation will apply to all the alternatives so if specific examples are used to explain the group thought pattern any one of the alternatives may be referred to in the discussion. This discussed need only be completed once.

Each alternative is to have its own table (like the one below for Alternative #1) identifying the requisite information asked for in the table.

 

 

Decision Alternative #1
Fill in here: What is alternative #1?   Detail the alternative chose and how it would be implemented as a choice for the decision maker
Uncertainties Associated with Alternative #1
Fill in here:  Identify uncertainties associated with Alternative #1 in choosing this alternative and why
Risk Tolerance Associated with Alternative #1
Fill in here:  Level of risk tolerance (High, medium, low) Identify the type and level of risk associated with Alternative #1 in choosing this alternative and why
Stakeholders (impacts the alternatives and alternatives impact stakeholders)
Fill in here:  Identify all stakeholders impacted by Alternative #1 and how they would be impacted

 

 

Step Four: Consequence Table

 

Review:

A decision maker must understand the possible Consequences (concerns) for each of the alternatives before making a final decision. Evaluate honestly the consequences of each alternative to help identify those alternatives that best meet all of the objectives. In order for the group to identify the consequences that an alternative may have for the decision maker, it is essential that the group envision how the decision maker expects the alternative to work when implemented.

 

For instance, in the Lifetools Lesson four explanation of the consequence table the example is given of the family who is choosing a vacation. In each alternative the family examines the vacation by actually envisioning how they expect to behave on vacation option. In one trip they imagine that the children would have more fun than the adults because of the activities the option affords. In another trip, they imagine that everyone has some activities to please while another trip has activities that work for everyone and an appealing side day trip that had not been thought about by the couple. The idea of a day trip having a side trip was so appealing that the couple revised their objective list to include the idea.  Notice in identifying the consequences of the trip options the couple imagines how the alternative will play out if they choose the alternative so they can determine how the trip meets the objective expectations. This is how they can see what consequences the alternative suggests. If their objective is to please the whole family then certainly the consequence of an alternative failing to please all is not an alternative to be considered and would therefore rate low in the consequence table for that objective.

 

One way to evaluate the objectives against each alternative is to use the consequence table below.   A consequence table helps provide a clearer view related to the performance of each alternative to meeting an objective. It does not rate the objective as to the value or importance to the stakeholder/decision-maker(s) merely how well the alternative “fits” the objectives of the decision maker.

 

Place the objectives list from Step 2 into the “Objectives” column.   Then, rate the alternative from Step 3 by placing a rating of 1(not meeting the objective well), 2 (meeting the objective well), or 3 (meeting the objective very well) into the associated box that aligns with the correct objective.  Total the score, should one be very low in meeting all the objectives then this would be a good time to eliminate the alternative.

 

Table 1 Consequences

Objectives Alternative #1 Alternative #2 Alternative #3 Alternative #4  
           
           
           
           
           
           
Totals          
           
Consequences: explanation of how the group applied the model to the case study
Fill in here:  Identify the consequences to each alternative. In the consequence table rate the consequences with respect to each objective. Explain in detail how the group arrived at the consequences. Go through the process covered in the Lifetools PrOACT Lesson Four in discussing why and how the consequences to each alternative were evaluated by the group. Include any possible bias or influences that might have entered into the “imagination of the alternative’s implementation” by the decision maker as expressed in the group discussion. Identify the ideas that were discussed by the group and the reasons given to finally choose the objectives listed above.

It is important to remember that the consequences and objectives are all of equal value to the decision maker at this point in the process.

 

 

 

Tradeoffs

Objectives frequently conflict and sacrifices must be made. Not all alternatives are a good fit.  The question then becomes how to choose the best alternatives.  One way to do so is to try to look for ways of equalizing the alternative or trade-offs.  Trade-offs focus on two things: (1) what consequences the decision maker/stakeholder is willing to accept and (2) what advantages the decision maker/stakeholders are not willing to give up by choosing an alternative.

 

In the trade off example in the Lifetools lesson Five, it was explained that a consequence of the alternative that featured a space with move in ready décor was higher rent. The alternative with poor décor had considerably cheaper rent. Since good décor was important to making the store successful as was low rent the question than became how to trade-off the poor décor and get a lower rent. Research was done and the cost of fixing up the space with the poor décor to the lower rent still kept the alternative as feasible. The rent savings was traded against the décor objective. Now the options were more equal in their status because the consequences of both options were minimized. The impact of the difference in rent payments was minimized by the increase of rent cost with the improved décor cost.

 

Using the consequence table 1 results see if you can find reasonable tradeoffs from the facts that will equalize alternatives. Be sure to use the Lifetools Lesson Five as your guide.

 

 

Table 2 Tradeoffs

Objectives Alternative #1 Alternative #2 Alternative #3 Alternative #4  
           
           
           
           
           
           
           
Totals          
Fill in here:  Identify the tradeoffs, if any, possible in the consequence table. Explain in detail how the group arrived at the tradeoffs or lack thereof. Go through the process covered in the Lifetools PrOACT Lesson Five in discussing why and how the consequences to each alternative were evaluated by the group. Include any possible bias or influences that might have entered into the choice of tradeoffs by the decision maker as expressed in the group discussion. Identify the ideas that were discussed by the group and the reasons given to finally choose the objectives listed above.

It is important to remember that the consequences are all of equal value to the decision maker. Rent is no more important a consequence than décor is to the decision maker.

It is possible that consequences to the alternatives cannot be equalized through tradeoffs. If that is the case in this instance, an explanation as to why is needed.

 

 

 

Step Five: Decision Matrix

 

Once the objectives have been equalized using trade-offs, one final step requires weighing the objectives to the alternatives. This step puts some subjectivity back into the process. It allows the decision maker to identify one objective as more important than another and thus perhaps satisfy a value that is not met by equalizing all the objectives. To do this use a Decision Matrix tool.

 

Read and Review:

 

  • Decision matrix sample in course content area
  • Course Resources, toolbox, & decision matrix sample

 

Decision Matrix:

Complete the matrix below:

 

Part 1

 

Table One (Unweighted):

Replace Objective 1, Objective 2, Objective 3, Objective 4 and Objective with the actual identified objectives.  Then replace Alt 1, Alt 2, Alt 3, and so forth with the alternatives that you have identified.

 

Then, working through each column of objectives, rate each alternative with a rating of 0 (poor) to 5 (very good) depending on how well the alternative meets the objective.  It is possible to use the same rating for more than one alternative.

 

Total each row inputting the total under the Total column.

 

Rate how well each objective is met using a scale of 0 to 5, with 3 being the best.

Decision Matrix Table 1

Objectives Objective 1 Objective 2 Objective 3 Objective 4 Objective 5 Total
             
Alt 1 0 3 1 3 1 8
Alt 2 1 2 3 3 1 10
Alt 3 2 1 2 3 3 11
Alt (etc.)            
Fill in here:  Explain in detail how the group arrived at the ratings for each alternative and objective. Identify the ideas that were discussed by the group and the reasons given to finally choose the ratings. Discuss the reasoning behind the rating of the objectives in the table. What facts or process elements suggested the results? Discuss and explain in detail. Be sure to support the discussion with the case study facts.

Explanation of Rating and Choice

Fill in here:  Explain in detail how the group arrived at the ranking of the objectives from least to most importance to the decision maker. Discuss the reasoning behind the rating and weighting rank of the objectives in both tables. What facts or process elements suggested the results. Discuss and explain in detail.

Identify the ideas that were discussed by the group and the reasons given to finally choose the ratings. Be sure to support the discussion with the case study facts.

 

Part 2

 

Table Two (Weighted):

 

Next, determine the importance of each objective by assignment a weight.  For example, Objective 1 may be the most important objective and you might assign a weight of 30%.  The least important objective may be 5%.

 

Input weight in the Weights column and total.  The total must equal 100%. Make sure there is a weight for each objective.

 

Multiply the rating from Table One.

 

Once all ratings have been multiplied, total the row and input the number under the Total column.

 

Decision Matrix Table 2

Objectives Objective 1 Objective 2 Objective 3 Objective 4 Objective 5 Total
Weights 20% 20% 20% 20% 20% 100%
Alt 1            
Alt 2            
Alt 3            
Alt (etc.)            
             
             

 

Explanation of Rating and Choice
Fill in here:  Explain in detail how the group arrived at the ranking of the objectives from least to most importance to the decision maker. Discuss the reasoning behind the rating and weighting rank of the objectives in both tables. What facts or process elements suggested the results. Discuss and explain in detail.

Identify the ideas that were discussed by the group and the reasons given to finally choose the ratings. Be sure to support the discussion with the case study facts.

 

Step 6:  Linked Decisions

 

Before the selection of a final alternative, the decision maker must assess linked decisions.  Linked decisions look at the possible decisions that may need to be made after implementation of the alternative.  Mentally look into the future. Decisions made today will influence decisions of tomorrow. For example, remember the vacationers in the consequence table example? The couple liked the alternative that allowed them to take a day trip to Oxford. A linked decision would be how much would the side trip to Oxford cost? If the couple makes the decision to choose the alternative with the side trip because they like the idea of the side trip, only to find it costs too much, this is likely to change their evaluation of the alternative to meeting the objectives. Thus, affecting the decision, they make in choosing the alternative with the side trip in the first place. It is important to examine all possible decisions related to the one made to adequately assess how the alternative meets the objectives.

 

Linked Decisions explanation of how the group applied the model to the case study

Fill in here:  Identify and explain in detail the linked decisions found with each alternative. How did the group arrive at these possible decisions? Identify the ideas that were discussed by the group and the reasons given to finally choose the possibility of future decisions. Be sure to include case study facts, source material from the readings to support the ideas, reasoning and conclusions. Discuss and explain in detail.

 

 

 

 

Step 7:  Make the Decision

 

Using all the tools, research, and model results collected by the group make the decision.

The Decision as determined by the decision matrix:

Fill in Here

 

 

 

Fill in here:

Recommended Decision and Why?  Clearly indicate in the blue box above the recommended decision made by the group. Explain in detail the group’s reasoning for the choice. Use the above sections in explaining how or why this is the recommended decision. Be sure to include source material from the readings to support the ideas, reasoning and conclusions.  Discuss and explain in detail.

 

Second-best Recommendation and Why? Use the above sections in explaining how or why this is the second best recommended decision. Be sure to include source material from the readings to support the ideas, reasoning and conclusions.   Discuss and explain in detail.

 

Points to consider In Making the Decision:

Using the data from Part Two of the Decision Matrix determine the best alternative. (The alternative with the most number of points should be the best alternative.)

 

It is possible to have more than one alternative with the same rating.  Therefore, the group must decide which one is best.  Should this happen, provide an explanation for the alternative selected. Be sure to examine how the group determined the best alternative (For instance, did the group choose to change the weighting of the objectives?).

 

 

 

Step 8: Does the decision make sense? One Last Review

 

Earlier the point was made that the decision-making process needs to be reviewed during the work and at the end.  Reflection assures that bias and influence are weeded out as well as the fact that the best decision is made. In this reiterative step, discuss mistakes made in each of the model steps and how these mistakes were corrected.

 

Review:
Fill in here:  Is the right decision framed?  If so, why and if not, why not?  Be sure to include source material from the readings to support the ideas, reasoning and conclusions.   Discuss and explain in detail.

 

 

Fill in here:  Are all of the objectives correctly identified and met? If so, why and if not, why not?   Be sure to include source material from the readings to support the ideas, reasoning and conclusions. Discuss and explain in detail.

 

 

 

Fill in here:  Are you satisfied with the alternatives chosen?  If so, why and if not, why not?  Be sure to include source material from the readings to support the ideas, reasoning and conclusions. Discuss and explain in detail.

 

 

 

 

 

 

 

 

 

Worksheet Submission Sheet

 

 

Step One: Framing the Decision

 

 

Framing of the Decision
Fill in Here:

 

Framing of the Decision: explanation of how the group applied the model to the case study
Fill in Here:

 

 

Step Two: Determining the Objectives

 

 

Decision Objectives
Fill in Here:

.

Objectives: explanation of how the group applied the model to the case study
Fill in Here:

 

 

Potential Stakeholders

Fill in Here:

 

Explanation of how the group applied the model to the case study
Fill in Here

 

 

Step Three: Creating the Alternatives

 

Alternatives: explanation of how the group applied the model to the case study
Fill in Here:

 

Decision Alternative #1
Fill in Here:
Uncertainties Associated with Alternative #1
Fill in Here:

 

Risk Tolerance Associated with Alternative #1
Fill in Here: 

 

Stakeholders (impacts the alternatives and alternatives impact stakeholders)
Fill in Here: 

 

 

 

Step Four: Examining the Consequences

 

Table 1 Consequences

Objectives Alternative #1 Alternative #2 Alternative #3 Alternative #4  
           
           
           
           
           
           
Totals          
           
Consequences: explanation of how the group applied the model to the case study
Fill in Here: 

 

 

Table 2 Tradeoffs

Objectives Alternative #1 Alternative #2 Alternative #3 Alternative #4  
           
           
           
           
           
           
           
Totals          
Fill in Here:

 

 

Step Five: Ranking and Weighting the Alternatives

 

Decision Matrix Table 1

Objectives Obj 1 Obj 2 Obj 3 Obj 4 Total
Alternative 1          
Alternative 2          
Alternative 3          
Alternative 4          
Alternative etc.          

 

 

Decision Matrix Table 2

Objectives Objective 1 Objective 2 Objective 3 Objective 4 Objective 5 Total
Weights 20% 20% 20% 20% 20% 100%
Alt 1            
Alt 2            
Alt 3            
Alt (etc.)            
             
             

 

Explanation of Rating and Choice
Fill in Here: 

 

 

 

Step Six: Linked Decisions to the Alternatives

 

Linked Decisions explanation of how the group applied the model to the case study
Fill in Here:

 

 

Step Seven: Making the Decision

 

The Decision as determined by the decision matrix:

Fill in Here

 

 

 

Fill in Here: 

 

 

 

Step Eight: One Last Look at the Decision

 

Review:
Fill in Here: 
Fill in Here: 

 

Fill in Here: 

 

 

Last Updated on