Week 11: Qualitative Decisions, AHP & Productivity Flashcards
What is the Allais’ Paradox?
It is the ‘rational’ approach to identifying the optimum decision is to take account:
- the probability of each possible outcome
- the consequence of each possible outcome
This involves calculating the expected utility of each action and choosing the action with the maximum expected utility. Idea is simple but not very simple for everyday decision making.
Describe the error in odds.
Using past experiences to estimate odds. Things that come to mind quickly seem more probable when it may not be.
Describe the error in values.
hint:emotional level
Values are harder to estimate than odds. About 90 - 95% of our decisions, even important ones, are made on the emotional, instinctual level.
Why do we make bad decisions?
Our brains evolved for a very different world. We must learn how to unlearn our natural instincts. We can have many performance measures, some performance measures are more important than others.
What is brute force with weighted expert opinion simple Multi-Criteria Analysis (MCA)?
Total = sum of (Expert W_n * Factor_n)
Total rank score = User W_1 brand + User W_2 colour , etc
Factorn_n = F (performance measure, …, n)
What are the disadvantages of MCA?
- weighting factors are often difficult to agree on by many parties
- may have inconsistencies within weighting factors
What are the advantages of MCA?
- Fast and dirty approach
- Can be combined with others to become very powerful such as fuzzy logic
What is Risk Based approach?
Risk = probability * consequence
Risk is often used to balance the funding gap – understanding gap leads to better decision-making.
What is the advantage of a Risk Based approach?
It can be powerful when combined with Monte Carlo analysis.
What are the advantages of AHP?
- based on mathematical decision theory and is an industry-standard
- generates ratio data
What are the disadvantages of AHP?
- labour intensive
- participants perceive the tool as a ‘black box’ if they don’t understand the math theory
What is Analytical Hierarchy Process (AHP)?
An in-depth pairwise comparison method by Thomas Saaty.
What are the steps of AHP?
1) Define objective and decision options
2) Structure elements in criteria, sub-criteria and alternatives
3) Make pairwise comparisons of elements in each group
4) Calculate weighting and consistency
- Find vector {W} normalised matrix
- Find {Ws} = [C] x {W}
- Calculate consistency check {consis} = {Ws}*{1/W}
- Find Lambda = avg({consis})
- Find consistency index, CI = (lambda - n)/(/n-1)
- Find CR = CI/RI
5) Evaluate alternatives according to weighting
6) Evaluate Benefit Cost Analysis (BCA)
7) Make decision
What is the Delphi Method?
A structured communication technique that seeks to minimise variance.
What is the principle of the Delphi Method?
Decisions formed from a structured group are more accurate than unstructured.
What is the assumption in the Delphi Method?
Group judgements are more valid than individual judgements.
What are the steps of the Delphi method?
1) Experts answer questions in 2/more rounds
2) Provide an anonymous summary of decisions and reasoning
3) Revise earlier answers in light of replies from other members
4) Process stopped after predefined stop criterion like number of rounds, stability of results or achievement of consensus
What is the Fuzzy Expert Systems approach?
It is based on how humans think. It looks at the world in an imprecise term which the brain then responds with precise actions.
Why has fuzzy logic been criticised?
The term fuzzy has resulted in the notion that fuzzy logic is somehow less exacting than traditional logic.
How would you improve decision-making?
- Know your bias
- Consider inside (optimist) and outside (realistic) views
What is cognitive bias?
hint:website
How easy an idea is to process and understand. Even though it is easy, it does not necessarily mean its the truth. When something sounds right you should question it.
What is sunk-cost fallacy?
The phenomenon whereby a person is reluctant to abandon a strategy or course of action because they have invested heavily in it, even when it is clear that abandonment would be more beneficial (from google). An example would be not leaving a bad movie before it ends because you paid for it (from notes).
What is self-serving bias?
If we win it is our success, if we lose it’s someone elses’ fault.
What is pseudo-diagnostic information?
Correlation implies there’s a causation when it’s not necessarily true.
What is subtlety diagnostic information?
Information that is important but you don’t think it is.
What is sorting relevance?
hint: confirmation bias
It is also known as confirmation bias. When you’ve decided on something, new information has less impact. Either blow it off or interpret information so it’s more favourable to you.
What is the IKEA effect?
People are willing to pay more for something they’ve made than a pre-assembled item.
What is Scientific Management?
Also called Taylorism, developed by Taylor in the 1800s. A way to increase productivity by applying science to workflows.
What were the findings that led to scientific management?
- increase productivioty means less workers
- workers get paid for their time so work slower
- workers have freedom to create their own procedures
All links to (economic) inefficiency
What are the principles of scientific management?
hint:science
- use scientifically optimised work routines
- scientifically select and train workers
- ensure work routine followed
- managers and workers to use scientific methods
How would you apply scientific management?
- micro management
- division of labour
- give directions
- use separate managers
- increase in productivity means they would get paid more
- use repetition (like a robot on a production line)
What are the drawbacks of scientific management?
- work becomes monotonous and dehumansing
- low job satisfaction
- worker measured by output alone
- if productivity goes up and market requires no increase in output then = useless
- payment is good in the beginning and then not
- gave rise to unions
What is Elton Mayo’s Hawthorne effect?
Increase in productivity related to awareness of observation. Motivational effect on workers when interest were being shown to them.
What was the initial experiement for the Hawthorne effect?
The experiment investigated the effect of lighting on efficiency and productivity. Workers were more productive regardless of change but slumped once the experiment was ended. This produced an inconclusive result.
What is the criticism related to the Hawthorne effect?
It is manipulative.
What is LEAN?
It is a concept that moves from ‘make more faster’ to ‘make what is needed when needed’. Focuses on difference between value and waste. The purpose is to eliminate waste.
What is the current state of productivity in construction?
- Physical characteristics of production is ignored
- Production is uncontrolled
- Lack of technical knowledge about production
- No systematic process for learning from experience
- A push vs pull system
What is the formula for productivity?
P = (E * I * H * B) / C
where:
E = efficiency (min/hr)
I = load factor
H = heap capacity
B = bucket fill factor (load efficiency factor)
C = cycle time
What are the different types of efficiency?
- excellent: constant supervision, 55 min/hr
- average: intermittent supervision, some conflicts maneuvering, dry, loose soil with some rocks - 50 min/hr (usually use this)
- poor: no supervision, night work, tight work area, wet clay soil, rocks - 45 min/hr
- very poor: loading trucks in urban area, trucks experience heavy traffic delays - 30 - 40 min/hr
What is the load factor?
I = LF = I / (1+Sw)
Machinery in loose m^3. Factor changes in-back to loose m^3.
What is the important volume conversion?
gammab / gammal = Vl/Vb
or
gammab / gammac = Vc / Vb
What is fleet match?
It is the bunching of trucks. Have to reduce the amount of bunching inside network. Use fleet match to find the bunching efficiency.
fleet mathc = # of trucks/# of trucks required
What is the theory of a good decision?
hint: formula
expected value = odds of gain x value of gain
What are the differences between LEAN and Traditional?
Traditional
- decisions are made sequentially by specialists and ‘thrown over the wall’
- activities are performed as soon as possible
- not all product life cyle stages are considered in design
- participant build up large inventories to protect their own interests
- organisations link together through market, and take what market offers
- learning occurs sporadically
LEAN
- downstream players are involved in upstream decisions, and vice versa
- activities are performed at the last responsible moment
- all product life cycle stges are considered in design
- buffers are sized and located to perform their function of absorbing system variability
- systematic efforts are made to optimise supply chains
- learning is incorporated into project, firm and supply change management
