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Apply decision analysis to the decision problem facing iResearch and advise the managers on their decision problem. Within your group produce a report of a minimum of 2,000 words that addresses the following questions:

  1. Discuss the value of decision analysis within the context of an organisation
  2. Outline the challenges facing iResearch and discuss any assumptions you have made
  3. Apply decision analysis and develop an appropriate decision tree
  4. Calculating the expected values and following the rollback method, outline the most suitable approach for iResearch. Discuss your recommendations for the managers of iResearch
  5. Discuss the strengths and limitations of your analysis in the context of the decision problem
  6. Discuss the influence of the iResearch engineers changing their initial probability estimates. Discuss the influence of probability estimates and uncertainty within the decision making process.

The Value of Decision Analysis within the Context of an Organization

Decision making and analytical thinking is fundamental to the progress of any company. But, regardless of the decision making context, making verdicts depend on the forming of judgements and developing choices. However, decision making becomes difficult at times due to the rising of different factors which can affect the outcomes. Decision making is therefore a process which involves data analyses and the application of available techniques and strategies to resolve the problem under concern and develop an action plan (Betsch and Glöckner 2010, p. 270).

In the case study provided, IResearch is faced with difficulties on whether it should submit its proposal for ACME project because of some concerns. In this paper, I will provide more data on decision making and analytical thinking as I look at the case of IResearch.

Discuss the value of decision analysis within the context of an organization

Decision analysis is the interactive, quantitative and systematic approach used to evaluate and address the vital choices brought forward by companies both in the public and private sector. ACME system pointed out two different software design entities which could develop their software which could support the monitoring and accessing of its logistics and production efficiently. IResearch was one of the companies which had the capability to develop the software application needed by ACME systems.

But the management at IResearch raised some concerns about ACME’s project and on whether to submit their proposal. Engineers and the management at Iresearch arranged for a meeting to discuss about the project (Hinojosa et al., 2017, p. 180). IResearch was to compete with one other firm for the tender and this gave it a fifty-fifty chance to get the tender. In such a case, decision analysis is important to know how the organization could develop a better proposal than that of the rival.

Decision analysis is Important for any entity but it requires the right information ability to make right choices and synthesize that data. According to scholars, applying decision scrutiny in the planned management process is valuable for any organization (Grant 2016, 3). In IResearch, decision analysis between engineers and the management would help in reconciling viewpoints about the project under concern. Through the decision analysis, IResearch could also be able to decide on which software package and platform was suitable for ACME project. Decision analysis is therefore valuable within the organizational context because it helps in problem finding, solution and formulation of strategies.

Challenges Facing iResearch

Outline the challenges facing iResearch and discuss any assumptions you have made

Iresearch is facing some problems in applying for the tender given by ACME systems. One of the major problem faced by IResearch is competition with the rival firm (Plessner, Betsch, and Betsch 2011, p. 52). The existence of a rival firm means that they all have an equal chance of getting the tender assuming that both firms provide similar services and have equal market shares. It means that IResearch have to make better decisions while submitting its proposal.

In this case I assume that ACME systems will give the tender to the company which offers to provide the best services. IResearch specializes on software application development for engineering and production management companies. ACME requires the software application to be developed for a mobile platform or a web-based platform. IResearch will have to consider both platforms and this calls for a meeting between the engineers and the management to discuss more on the project.

Another challenge faced by IResearch is that the firm can only apply one platform for the project and this makes it difficult for the company to develop a software package which can work. The company therefore have to agree on the platform to use to determine the success of the project (Schoenfeld 2010, 7). The company engineers came up with four software packages which could help in the success of the project. The first software developed demanded a lot of capital which makes it difficult to apply.

The second platform had lower associated costs but its probability of operating correctly was 45%. The third one had a probability of 75% while the fourth had a probability of sixty five percent. IResearch can send the proposal but it will have the greatest problem is to decide which approach to use so that it can get the best returns. The decision have to be made before submitting the proposal meaning that a functioning software package have to be submitted. IResearch will use some money to develop a proposal for ACME but if IResearch gets the contract it will receive more money for software package development (Salas, Rosen and Granados 2010, p. 942).

The company will therefore have to assume that it will get the contract by presenting a functioning software package to ACME. After gaining the contract the company will make huge returns and this is very important to the company.

Applying Decision Analysis and Developing an Appropriate Decision Tree

Apply decision analysis and develop an appropriate decision tree

A choice tree involves a diagrammatic demonstration of an issue and on this tree all possible action courses are shown. In this tree all the action plans are shown. In this tree, all the decisions are shown and the possible actions are also demonstrated. Decision tree has several stages and the management have to pay attention to every step (Provost and Fawcett 2013, p. 59). The first stage is referred as the construction phase where the management will have to draw the tree and put all the financial outcomes and probabilities are placed on the diagram. In this phase the management will consider the cost of implementing a given software and its benefits.

The management also determines the returns if it applies a given software to complete the task given by ACME. If the program has more has a high probability of working then it can be used in the proposal so that it can help Iresearch to get the tender. The most important costs such as the cost of developing a software and returns are the only costs which are considered.

The other phase of decision tree is recommendation and evaluation stage. In this phase the management rolls back the decision by calculation the expected value of all outcome points then applies them in decision making while still working around the choice tree. In this phase the management develops the action course which is to be followed (Greco, Figueira and Ehrgott 2016, p. 8). The manager can recommend IResearch to use first software because it has a high probability of returns in the project.

Using the best software in this case means that the company can get more returns and increase the possibility of being given the tender. But the right information must be used to avoid the application of a wrong software. The decision tree below shows the variety of decisions that IResearch have to make. IResearch will have to make a decision on whether to submit the proposal so that it can continue to choose which software to use for the project.

Decision tree

Calculating the expected values and following the rollback method, outline the most suitable approach for iResearch. Discuss your recommendations for the managers of iResearch

Rollback is a technique which is similar to SQL rollback data. The method is also known as the “look back” technique and managers looks over the past subcontracts. While calculating the expected values, you minus one month to the portion used in the production. The rollback method helps in determining the expected values in the contract (Blanding 2012, 251). IResearch can apply different approaches to make decisions on the best step to take. But rational approach is the best because it is a step-by-step, and a systematic process which helps in making decisions. But the decision makers must have all the data needed and be objective of what they are doing.

Calculating the Expected Values and Following the Rollback Method

Calculation

The probability of getting the contract is 0.5 because there are two companies

The cost of preparing the proposal is £10,000 and £500,000 is paid upon receiving the contract. The company uses Use software £145,000 in developing software A, £80,000 for B, £102,000 for C and £92,000 software D.

Software A

145000

100

145000

Software B

80000

Success

55

0.5

Failure

45

 

Contract awarded

Software C

102000

Success

75

500000

Failure

25

 

Preparation of the proposal

Software D

92000

Success

55

10000

10000

Failure

45

Do not prepare the proposal

0

0.5

Contract not awarded

480000

The management requires to determine a suitable method so that it can be awarded the tender. In this case, I would recommend the management to use software A when submitting their proposal because it has a higher probability of performance than the other packages. IResearch will therefore have an opportunity to use the best software that can help in increasing the returns. The software must be able to satisfy the requirements as per the specifications by ACME. It is because a software such as software B has low operation costs but its probability of functioning is low.

The company therefore cannot choose the program in terms of costs, it can only choose in terms of the output. I would therefore recommend IResearch manager to take time and look for all the information necessary for proper decision making. As discussed in this paper, decision making requires managers to have the right information to avoid making unnecessary choices.

Strengths and limitations

There are some limitations and strengths associated with my analysis on decision making (Grant 2016, p. 5). The strengths include all things that I have achieved to show in my context while the limitations may include the things which are difficult to understand or have no relevance (Plessner, Betsch, and Betsch 2011, p. 2). In my analysis I have been able to show the importance of decision making in an organization and why the approach used matters. According to my analysis, making decision on the type of software to be used is important because it will help in determining the amount of capital to be used in making the proposal (Schoenfeld 2010, p.5).

Using the correct information in decision making also matters because it determines the final decision made. I have used information from IResearch case study meaning that the information is correct and the decisions made about the software development are all relevant. The information is also reliable because it has a systematic procedure which can be replicated by anyone in need of making decisions. In the context I have also applied qualitative studies which are essential in the management and simplification of the data used without destroying the meaning.

Recommendations for the Managers of iResearch

On the limitations side, the analysis does not give information about the rival company for easy comparison of the systems used by the two companies (Levac, Colquhoun, and O'Brien 2010, p. 69). If my analysis had information on the two companies it would be possible to determine the level of completion which is present. In such a way, it would be possible to determine if the company has a probability of fifty percent. Additionally, the research does not focus more on quantitative research which can help in giving more information which can help in better decision making.

In my analysis, it is evident that the cognitive thinking is used for decision making and this method limits the analysis of the outcome. The management proofs, axioms, paradoxes and cognitive demerits involved in decision making in group decision making can lead to rise of cost overruns, deferred choice making and conflicts (Uusitalo, Lehikoinen,  Helle, and Myrberg 2015, p. 24). The analysis therefore contains multi-faceted limitations and strengths.

Discuss the influence of the iResearch engineers changing their initial probability estimates. Discuss the influence of probability estimates and uncertainty within the decision making process

 ACME promised to award the contract to the company which had the best software capability and technical plan. The engineers decided to develop different platforms which could fit the project. All the software packages developed by these engineers had different probabilities and associated costs (Kahneman and Tversky 2013, p. 270). The change in possibilities have a great influence on decisions

made because they determined the cost and probability of performing. According to the values given, some had higher performance capabilities than others while others had high associated costs than others. Changing the probability estimates would help in simplifying the decision making process because it became easier to predict which software will perform in accordance with the set specifications (Renn 2017, p. 2).

Most decisions are made under uncertainty because no one knows what the future holds. The management also have to use probability instead of real figures which means that something positive or negative can happen. The management chooses actions under imperfect observations and this may lead to either negative or positive outcomes (Snyder and Diesing 2015, p. 7). The process of decision making under the use of uncertainty leads to the involvement of deep research and studies to avoid giving the wrong probability figures. Uncertainty and probability estimates therefore have a great influence on decision making.

Conclusion

IResearch being awarded the tender is a probability because it has an equal chance with its rival. But making the right decisions on how to develop a functioning software can give it a better chance to stand out in the offer. In this paper I have given important data on the decision making process and following the data can help IResearch to get the tender. Decision making requires discussions with the involved people and extensive research by the management to determine what should be done to achieve the best. 

References

Betsch, T. and Glöckner, A., 2010. Intuition in judgment and decision making: Extensive thinking without effort. Psychological Inquiry, 21(4), pp.279-294.

Blanding, W.H., Hewlett-Packard Development Co LP, 2012. Allocating computer resources to candidate recipient computer workloads according to expected marginal utilities. U.S. Patent 8,250,581.

Hinojosa, A.S., Gardner, W.L., Walker, H.J., Cogliser, C. and Gullifor, D., 2017. A review of cognitive dissonance theory in management research: Opportunities for further development. Journal of Management, 43(1), pp.170-199.

Garrison, R.H., Noreen, E.W., Brewer, P.C. and McGowan, A., 2010. Managerial accounting. Issues in Accounting Education, 25(4), pp.792-793.

Greco, S., Figueira, J. and Ehrgott, M., 2016. Multiple criteria decision analysis. New York: Springer.

Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.

Kahneman, D. and Tversky, A., 2013. Choices, values, and frames. In Handbook of the Fundamentals of Financial Decision Making: Part I (pp. 269-278).

Levac, D., Colquhoun, H. and O'Brien, K.K., 2010. Scoping studies: advancing the methodology. Implementation science, 5(1), p.69.

Parnell, G.S., Driscoll, P.J. and Henderson, D.L. eds., 2011. Decision making in systems engineering and management (Vol. 81). John Wiley & Sons.

Plessner, H., Betsch, C. and Betsch, T. eds., 2011. Intuition in judgment and decision making. Psychology Press.

Provost, F. and Fawcett, T., 2013. Data science and its relationship to big data and data-driven decision making. Big data, 1(1), pp.51-59.

Renn, O., 2017. Risk governance: coping with uncertainty in a complex world. Routledge.

Salas, E., Rosen, M.A. and DiazGranados, D., 2010. Expertise-based intuition and decision making in organizations. Journal of management, 36(4), pp.941-973.

Schoenfeld, A.H., 2010. How we think: A theory of goal-oriented decision making and its educational applications. Routledge.

Snyder, G.H. and Diesing, P., 2015. Conflict among nations: Bargaining, decision making, and system structure in international crises. Princeton University Press.

Uusitalo, L., Lehikoinen, A., Helle, I. and Myrberg, K., 2015. An overview of methods to evaluate uncertainty of deterministic models in decision support. Environmental Modelling & Software, 63, pp.24-31.

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