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USING SMART
(Simple Multi Attribute Ratting Technique)
Introduction
• Decision problem that involves a number of objectives tends
to overlook making tradeoff between these objectives. It
causes these problems:
Selection of option that perform well only for particular
objective(s)
Rejection of attractive option since their good
performance in some objectives can’t compensate bad
performance in another objective.
Introduction
For example:
– A laptop is rejected because of its slow processor speed,
despite its compactness, reliability, and low price.
– A supplier is chosen because of his low price, despite his
slow delivery times and poor after-sales service.
Introduction
• Those problems rise since decision maker has limited
information processing capacity.
• When face a large and complex problem:
– too much information to handle simultaneously.
a decision maker is forced to make simplification
• Attributes/Criteria
– Measure performance in relation to an objective
– If the objective “maximize the exposure of a television
advertisement”
• The attribute: “number of people surveyed who recall
seeing the advertisement”
An Office Location Problem
• A small printing & photocopying business must move to new
place.
• The owner considers 7 possible locations
Location Annual Rent ($)
A Addison Square 30,000
B Bilton Village 15,000
C Carlisle Walk 5,000
D Denver Street 12,000
E Elton Street 30,000
F Filton Village 15,000
G Gorton Square 10,000
An Office Location Problem
• Consideration toward some factors:
– Addison Square
• a prestigious location, close to potential customers
• expensive to rent
• an old dark building that won’t be comfortable for staff
to work in.
– Bilton Village
• new building that will provide excellent working
condition.
• several miles from center town, where most of
potential customers are to be found
8 SMART Stages
Simple Multi-attribute Rating Technique
• Stage 1, identify the decision maker, in our problem is the
business owner.
• Stage 2, identify the alternative courses of action, in this
problem are 7 possible locations.
• Stage 3, identify the attributes with are relevant to the
decision problem, in our case, rent cost, quality of working
condition, size deserve to consider.
– We need set of attributes that can be assessed on a
numerical scale.
• Stage 4, assign value to measure performance of each
alternative based on chosen attribute.
8 SMART Stages
Simple Multi-attribute Rating Technique
• Stage 5, determine a weight for each attribute, that reflects
their level of importance for the decision maker.
• Stage 6, for each alternative, take a weighted average of
values assigned to that alternatives
– Represents how well an office performs over all the
attributes.
• Stage 7, make a provisional decision (elimination of inferior
alternatives).
• Stage 8, perform sensitivity analysis, to see how robust the
decision.
SMART-Stage 3
• In our case, we have already passed both stages 1 & 2.
• We then jump to stage 3, to identify the attributes which the
decision maker considers to be relevant with the problem.
– Creating a value tree can be useful
criteria
costs benefits
costs benefits
benefits
short term costs long term cost convenience on the move benefits
benefits
costs
benefits
Denver Street 70 50 30 55 30 90
Filton Village 0 0 70 0 80 0
II. Visibility 90 0
best
III. Image 80 0
best
IV. Size 70 0
V. Comfort 60 0
VI. Car-parking facilities 50 0
a. Ranking level of importance of 40 0
best
each attribute 30 0
best
assigning the most 20 0
best
preferred with weight 10 0
100. 0 0
worst worst worst worst worst worst
b. Comparing the rest attributes with the most preferred
How much important:
improvement from the worst improvement from the worst
alternative to the best compare to alternative to the best alternative
alternative of visibility, of closeness to customer
SMART-Stage 5
Determining weight of the attributes
best
100 0 Location Original Normalized
90 0 Weights Weight
best
80 0 Closeness to 100 0.32
best customers
70 0
Visibility 80 0.26
60 0
50 0 Image 70 0.23
40 0
best Size 30 0.10
30 0
best
20 0 Comfort 20 0.06
best
10 0
Car-parking 10 0.03
0 0 facilities
worst worst worst worst worst worst
closeness visibility image size comfort car-parking
to facilities
customer
Comfort 0 0.06 0
Total 80.8
SMART-Stage 6
Calculating aggregate of weighted value
Total Aggregated
Location
Cost ($) Benefit
100 0
A Addison Square 35,000 80.8 90 0
A
80 0 x
B Bilton Village 17,800 39.4 E
70 0 x
G
value of benefit
C Carlisle Walk 6,700 47.4 60 0 x
D
x C
50 0 x
D Denver Street 14,100 52.3 B
40 0 x
E Elton Street 34,800 64.8 30 0 F
x
20 0
F Filton Village 18,600 20.9
1500 10 0
G Gorton Square 12,000 60.2 0 0
40,000 30,000 20,000 10,000 0
cost
benefits
costs benefits
Image 0 0
Size 30 0.5
Comfort 20 0.333
Car-parking 10 0.167
facilities
Image 70 0.28
Size 0 0
Comfort 0 0
Car-parking 0 0
facilities
100 0 100 0
90 0 90 0
80 0 80 0
Value of benefit
Value of benefit
70 0 70 0
60 0 60 0
50 0 50 0
40 0 40 0
30 0 30 0
20 0 20 0
101500 1500
0 1500 1500 1500 1500 1500 1500 1500 1500 1500 10 0
1500
0 0 0
0 10 20 30 40 50 60 70 80 90 100
weight placed on turnover
SMART-Stage 8: Sensitivity Analysis
100 0 100 0
90 0 90 0
80 0 80 0
Value of benefit
Value of benefit
70 0 70 0
60 0 60 0
50 0 50 0
40 0 40 0
30 0 30 0
20 0 20 0
101500 1500
0 1500 1500 1500 1500 1500 1500 1500 1500 1500 10 0
1500
0 0 0
0 10 20 30 40 50 60 70 80 90 100
weight placed on turnover
• As long weight of total turnover < 52.1 Elton Street is the most attractive
• When weight of total turnover > 52.1 Addison Square is the most attractive
PPA for Addison Square
POTENTIAL CONSEQUENCE POSSIBLE PREVENTIVE CONTINGENT
PROBLEM CAUSE ACTION ACTION
Cannot pay Expelled from Rent is so Negotiate for a Rent smaller
rent property expensive longer term, space for front
lower rent office and
move back
office to
cheaper
location
Low cash flow Create Change
after moving to promotional business model
new office program
Uncomfortable High employee Old dark Refurbish the Move to
office turnover building office with another
bright color location
and new
furniture
Thanks