Decision Analysis for Management Judgment, 6th Edition

3Decisions involving multiple objectives: SMART

Introduction

As we saw in Chapter 2, when decision problems involve several objectives, unaided decision-makers tend to avoid making trade-offs between these objectives. This might lead to the rejection of relatively attractive options because their good performance on some objectives is not allowed to compensate for their poor performance elsewhere. For example, we might reject a supplier because of their high price despite their fast delivery times and excellent after-sales service. These problems can arise when there is too much information to handle simultaneously, so the decision-maker is forced to use simplified mental strategies, or heuristics, to make a choice.

This chapter will show how to use decision analysis to support decision-makers with multiple objectives. As stated in Chapter 1, the central idea is that by splitting the problem into small parts and focusing on each part separately, the decision-maker will likely acquire a better understanding of the problem. Also, by requiring a commitment of time and effort, analysis encourages the decision-maker to think deeply about the problem, enabling the development of an explicit and defensible rationale. As a result, they should be better able to explain and justify why a particular option is favored.

The methodology outlined in this chapter is underpinned by a set of axioms. We will discuss these toward the end of the chapter, but, for the moment, we can regard ...