MCDA - SELECTING ALTERNATIVES
In many decision situations in organisations decision-makers have to choose for one or several options amongst several alternatives. Selecting one or several suitable job candidates amongst a number of applicants, selecting projects for funding amongst several proposed ideas, choosing a marketing strategy amongst several possible strategies are examples of these kinds of situations.
In these decisions usually the decision-makers face multiple and conflicting objectives. One job candidate may have the best analytical skills, but scores poor on soft skills. One possible project may yield a high benefit, but is costly to be funded. One marketing strategy may increase the market share significantly and contribute moderately to the long-term profitability, but is, in short-term, quite costly. In the last case, to minimize costs, to maximize market share and to maximize profitability are conflicting criteria.
A Multiple-Criteria Decision Analysis (MCDA) can aid decision-makers to resolve “selection decisions” with conflicting objectives (criteria) and several options. Each option is scored on each criterion by a preference judgement of the decision-makers. After weighting each criterion relatively to each other, the weighted scores of each option are summed up resulting in an initial ranking of the available options. Subsequently, a sensitivity analysis on the assessed weights and scores can be preformed to generate further insights to the validity of the proposed order of options.
Conditions to apply an MCDA to select alternatives:
- Availability of a variety of possible alternatives
- Necessity to select one or several alternatives or to rank the alternatives
- Availability of some decision criteria (possibly in conflict with each other)
