BUSI 5423 – Minor Project 2 – Decision Analytic Practicum Part 1. And Memorandum

BUSI 5423 – Minor Project 2 – Decision Analytic Practicum

Part 1. & Part 2 Memorandum

 

Deciding on a document safe

 

Frisco Property Management is a hypothetical company that manages a large number rental properties in the northern suburbs of Dallas. The company is outfitting a new administrative office and needs to select a safe to store important documents. In working with their sales rep from Dallas Safe Company, they have been presented with the following 4 options:

Brand

Cost

Fire Rating

Capacity

Lock Quality

Superior Safe

$1,200

4 hours

12 cubic feet

High  (80)

Haddon Safe

$1,000

3 hours

10 cubic feet

Medium (50)

Ft. Knox Safe

$1,600

6 hours

12 cubic feet

Very high (100)

Safeco Safe

$800

2 hours

9 cubic feet

Low (20)

Smart Safe

$1,000

4 hours

9 cubic feet

High (80)

 

Note that relative rank values for the subjective attribute of lock quality have been assigned.

The manager responsible for the decision has assigned the following rank values to each attribute:

1 Fire rating (longest to shortest)

2 Lock quality (highest to lowest)

3 Cost (least expensive to most expensive)

4 Capacity (highest to lowest)

Questions:

1. Using SMARTER, compute the aggregate benefit score for each option

2. By taking into account the cost of each safe, determine which safe lies on the efficient frontier. Explain the significance of this term.

3. SMARTER is based on the “principle of heroic approximation.” Explain how this principle applies to your analysis of the problem and discuss whether you think it is appropriate.

4. Fire rating is particularly important if the safe contains paper documents that could suffer irreparable loss if destroyed or waterlogged in the event of a fire. Suppose, however, that the building had a top-of-the-line dry chemical fire suppression system. If the Fire Rating were changed to the least important criteria, how would your recommendation change?

Frisco Property Management

 

M E M O R A N D U M

To: ​Management

From:​[name]

Date:​[date]

Re:​Selection of a new fire safe

 

Business Problem

[briefly describe the business problem]

 

Options

The following fire safes have been evaluated:

Brand

Cost ($)

Fire Rating (hours)

Capacity (cuft.)

Lock Quality (relative subjective rating)

Superior Safe

$         1,200

4

12

80

Haddon Safe

$         1,000

3

10

50

Ft. Knox Safe

$         1,600

6

12

100

Safeco Safe

$            800

2

9

20

Smart Safe

$         1,000

4

9

80

 

The relative ranking of the variables in the decision is as follows:

[specify ranking]

Decision Analysis Method and Scoring

The decision as to which safe to select was made utilizing the SMARTER method. [briefly describe].

Based on this method, the Aggregate Benefit Score for each safe was computed.

​[insert table of ABS score calculations]

The outcome of this method shows that [safe brand] represents the best decision for Frisco Property Management.

Efficient Frontier

The following graph shows the Efficient Frontier for these safe choices.

[insert graph of ABS vs. price]

[discuss the meaning and interpretation of the efficient frontier]

 

The Principle of Heroic Approximation

This decision analysis relies on the principle of heroic approximation. [describe what this is and how it relates to the decision.

 

Alternative Decision Based on Change in Ranking of Fire Rating

Based on the recent decision of Frisco Property Management to invest in a state-of-the-art fire suppression system, the Fire Rating of the safe may be less important to the decision. With the relative ranking of Fire Rating reduced, the ABS would be recalucated as follows:

[Show recalculation of ABS with lower ranking of Fire Rating]

[Discuss change in decision resulting from this changed ranking]

 

 

Part 2: Format a memo from your organization similar to the Frisco Property Management memo

 

Business Problem

[briefly describe the business problem]

 

Options

The following options are available:

Option

Variable name 1

Variable name 2

Variable name 3

Variable name 4

Option A

 

 

 

 

Option B

 

 

 

 

Option C

 

 

 

 

Option D

 

 

 

 

 

The relative ranking of the variables in the decision is as follows: [list rank order]

 

Decision Analysis

Based on the data above, the Aggregate Benefit Score for each Option is as follows:

[Show table of calculation of ABS for each option].

This analysis shows that the optimal choice for our organization is [option X]. [describe factors that influenced this decision and why it is the best]