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Decision matrix analysis; Make sensible decisions with confidence

Study guide




Suppose your boss hires you and gives you the responsibility of finding a new supplier. You have found several suppliers so far and now you have to decide which one to choose. How can you be sure that you will make the best decision by considering all factors including cost, time, service level and technology infrastructure? Decision matrix analysis is a useful technique to help you make such decisions.

This decision matrix, also known as network analysis, Pugh matrix analysis, and multidimensional utility theory, is especially powerful when you have a number of good options and you have to choose from them. This feature makes it the best technique for making important decisions in situations where no options are a priority.

Using decision matrix analysis, you can make logical decisions with confidence when others can hardly make decisions.

How to use this tool?

This tool asks you to list your options and write horizontally in the rows of a table and write the invoices or factors you need in the vertical columns. Then, give points to the combination of each option / factor, assign a factor to each factor according to the importance of each factor, and then add these points together to get an overall score for each option.

It may seem complicated, but it is easy to use. In the following, we will give you step by step guidance and then an example.

Step 1

List all your options and write in the horizontal rows of the table and write the factors to consider in the columns. For example, if the goal is to buy a new laptop, the factors to consider are the price, dimensions and size of the hard drive.

Step 2

Then, by considering the columns in the table, assign points to each of the options for each of the factors. Rate each option from 0 (very poor) to 5 (very good). Remember that you do not have to consider different scores for each option; if none of the scores on one of the factors are good, you must score zero on all of them.

Step 3

Next you need to find the relative importance of each of the factors associated with your decision. Consider these coefficients with numbers from 0 to 5. For example, consider 0 for factors that are completely insignificant in your decision and 5 for very important factors. There is nothing wrong with all coefficients being equal.

These values ​​may be clear. If not, find a technique such as pairwise comparison analysis to estimate the coefficients.

Step 4

Now multiply each of the points you earned in step 2 by the coefficients you assigned to each of the factors in step 3. As a result, you will have the weight score of each option / factor combination.

Step 5

Finally, add the weight points of each option separately. The option with the highest score wins.

If your senses are that the option that scored the most points is not a good option, think more about the scores and coefficients you used. This may be a sign that some factors are more important to you than you initially thought. Also, if an option gets a very low score on one of the factors, it may be best to remove it altogether.

Example of using multi-attribute matrix analysis

The procurement manager must find a new supplier for the raw materials. He has four options, the factors to consider are as follows:

  • Cost.
  • Quality.
  • Place.
  • Reliability.
  • Payment options.

First, he draws a table like Table 1 and rates each option according to the importance of each factor:

Table 1: Example of a decision matrix analysis that shows how each supplier covers each of the factors, including non-weighted scores.

Factors: Cost Quality Place Reliability Payment options Total
Weighting coefficients:
Supplier 1 1 ۰ ۰ 1 3
Supplier 2 ۰ 3 2 2 1
Supplier 3 2 2 1 3 ۰
Supplier 4 2 3 3 3 ۰

It then estimates the relative coefficients for each factor, multiplies these coefficients by the points given to each of the options in the previous table, and adds them together.

Table 2: Example of a decision matrix analysis that shows how each supplier covers each of the factors, including weight scores.

Factors: Cost Quality Place Reliability Payment options Total
Coefficient: 4 5 1 2 3
Supplier 1 4 ۰ ۰ 2 9 ۱۵
Supplier 2 ۰ ۱۵ 2 4 3 ۲۴
Supplier 3 8 10 1 6 ۰ ۲۵
Supplier 4 8 ۱۵ 3 6 ۰ 32

Thus, the table shows the procurement manager that Supplier 4, although not flexible in payment, is the best option.

How much do you use systematic methods in making daily life decisions? Do you think these decision-making tools are only suitable for professional and managerial situations or do they also apply to personal decisions? If you have experience using these tools, whether professionally or in your personal life, it is good to share it with us and other readers of this article.

Source

mindtools

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Decision matrix analysis; Make sensible decisions with confidence

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