RE: FOR PUTUL

7/24/2015

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Problem Solving Framework 51

Context & Background

Problem Analysis & Description

Solution Development

Evaluation & Decision- Making

Communication & Implementation

Problem Solving Framework 52

Context & Background

Problem Analysis & Description

Solution Development

Evaluation & Decision- Making

Communication & Implementation

The Cuban Missile Crisis 53

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Group, Or Go It Alone

 Group Advantages

 Diversity of perspective

 Deeper discussions

 More ideas

 Easier buy-in and likely support

 Group Disadvantages

 Conflict

 Groupthink

 Changing risk perspective

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Could I Be An Astronaut? 55

Perception Of Risk

 Your perspective on risk relative to gain will

affect personal decision making.

 Risk is presented in different ways:

 Dread, where you have no control (terrorism)

 Unknown, where you really don’t know what will

happen (GMO)

 Depends on the numbers.

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Think About Risk

 Final seconds of game with rival, coach must choose

a play with a.) 95% chance of a tie score or b.)

30% chance of victory

 College senior with talent must choose a.) medical

school (80% chance of success) or b.) acting (20%

chance of success)

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Evaluating The Risk

Improbable Unlikely Likely Very Likely

L o w

M e d

iu m

H ig

h

N e g

a ti

v e i

m p

a c t

Likelihood of events occurring

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Evaluating The Risk

Improbable Unlikely Likely Very Likely

L o w

M e d

iu m

H ig

h

N e g

a ti

v e i

m p

a c t

Likelihood of events occurring

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Evaluating The Risk

Improbable Unlikely Likely Very Likely

L o w

M e d

iu m

H ig

h

N e g

a ti

v e i

m p

a c t

Likelihood of events occurring

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Think About Risk 61

Think About Risk 62

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Decision-Making Tools

 Use objective criteria and rational methods

 Weighted Criteria Matrix

 Cost/Benefit Analysis

 Alternatives Table

 Pros and Cons

 Paired Comparison

 Decision Trees

 Trade-off Table

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Ever Buy A Lemon? 64

Decision? 65

Repair: $1,500

Replace: $12,500

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Weighted Matrix Example

 Situation Analysis:

 The old heat pump was installed in 2000 – clearly a

lemon!

 New heat pumps are far more efficient than the old ones.

 New heat pumps use Puron as coolant.

 Natural gas is not available in my neighborhood.

 Unknown long term maintenance costs on old heat pump.

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Evaluation Criteria

 Short term financial impact.

 Long term financial impact.

 Energy efficiency.

 Peace of mind!

 Air filtration capability.

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Weighted Matrix Procedure

 Give a weight to each of the criteria

 Total of weights must add to 1

 Rank each solution in terms of how well it satisfies

the criteria

 From 1 to 10

 Multiply the weights by the ranks for each option

and add them up

 Higher score wins

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Ranking Matrix 69

1.00

Ranking Matrix 70

1.00

Ranking Matrix 71

1.00

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Ranking Matrix 72

1.00

Ranking Matrix 73

1.00

Ranking Matrix 74

1.00

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Ranking Matrix 75

1.00

Alternatives Table

 Weed out the bad ones.

Criteria Job 1 Job 2 Job 3 Job 4

Salary $38,000 $42,000 $41,000 $46,000

Schedule 38 hrs/wk 40 hrs/wk 50+ hrs/wk 60+ hrs/wk

Benefits Medical, Dental,

401K

Medical, Dental Medical,

Company Car

Medical, Dental,

401K,

Concierge

Service

Environment Cubicle, Relaxed Office, Relaxed Travel, Flexible,

Relaxed

Travel, Intense

Alternatives Table

 Weed out the bad ones.

Criteria Job 1 Job 2 Job 3 Job 4

Salary $38,000 $42,000 $41,000 $46,000

Schedule 38 hrs/wk 40 hrs/wk 50+ hrs/wk 60+ hrs/wk

Benefits Medical, Dental,

401K

Medical, Dental Medical,

Company Car

Medical, Dental,

401K,

Concierge

Service

Environment Cubicle, Relaxed Office, Relaxed Travel, Flexible,

Relaxed

Travel, Intense

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Trade-Off Table 78

Profits Customer Costs Time To

Implement

Internal

Resources

Alternative A Profits up by

$1,000

Costs to

customer

increases $1 per

unit

6 months 20 people

Alternative B Profits up by

$10,000

Costs to

customer

increases $0 per

unit

4 months 15 people

Pros And Cons

 List the pros

 Score them on a +1 to +10 scale

 List the cons

 Score them on a -1 to -10 scales

 Add them up

 Positive is good, or look for a difference in the scores

for multiple options

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Paired Comparison 80

Person 1

Person 2

Person 3

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Decision Trees 81

Option A – In-house,

same unit cost, fewer

products developed,

keep all jobs.

Decision Trees 82

Option A – In-house,

same unit cost, fewer

products developed,

keep all jobs.

Option B – Outsource,

increased unit cost, more

products developed,

eliminate some jobs.

Decision Trees 83

Option A – In-house,

same unit cost, fewer

products developed,

keep all jobs.

Option B – Outsource,

increased unit cost, more

products developed,

eliminate some jobs.

Demand Increases – 80% Probability.

Demand Decreases – 20% Probability.

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Decision Trees 84

Option A – In-house,

same unit cost, fewer

products developed,

keep all jobs.

Option B – Outsource,

increased unit cost, more

products developed,

eliminate some jobs.

Demand Increases – 80% Probability.

Demand Decreases – 20% Probability.

Demand Increases – 50% Probability.

Demand Decreases – 50% Probability.

Decision Trees 85

Option A – In-house,

same unit cost, fewer

products developed,

keep all jobs.

Option B – Outsource,

increased unit cost, more

products developed,

eliminate some jobs.

Demand Increases – 80% Probability.

Demand Decreases – 20% Probability.

Demand Increases – 50% Probability.

Demand Decreases – 50% Probability.

-$1 M

-$0

+$500 K

-$500 K

Decision Trees 86

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Decision Trees 87

My Dog’s Decision Tree 88

Effective Decision Making

 Well Defined Objectives

 Perceived Fairness

 Assumption Testing

 Multiple Alternatives

 Practice the five “WHYS”

 Open Debate

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