Question 2

A Company's innovation and technology leader has to choose which ideas to invest in and to move forward in the new product development process. There are five alternatives and four criteria. The table shows how each alternative has been evaluated in terms of each criterion. Note that time to market is to be minimized; the others are to be maximized.

a. Which alternative is best in terms of each criterion taken alone?

b. Are all of the alternatives non-dominated? If not, which ones are dominated? Eliminate the dominated alternatives from further consideration. Note: an altenative that optimizes at least one criterion cannot be dominated (unless there's another altenative which also optimizes the same criterion and does better on all of the others.)

c. Notice that there's at least one alternative which does not optimize any of the individual criteria, but it's still nondominated. Identify such an alternative and demonstrate by comparing it to the other nondominated alternatives that it is not dominated.

d. Compare alternatives A and B. What are the tradeoffs involved in choosing one alternative over the other?

e. Applying weights to select an alternative: This can be tricky. One of the issues is that the scales used to measure the criteria can affect the outcome. On way to overcome this is to convert the criteria values to percentages of the best outcome. For example, take the Revenue criterion, the best (highest) value is $25 million/year, produced by Alternative E. Alternative A has revenues of $12 million which is 48% of the best. So we replace the 12 in the table with 48. Alternative E's 25 would be replaced with 100.

Do this for all the criteria. However, the time to market is to be minimized. Here the best value is 7 months (Alternative D). Alternative A is 1 month or 14% worse than that, and we replace the 8 in the table with -14; note the negative sign. We replace the other values with their appropriate negative percentages; the 7 for Alternative D is replaced with O.

i) Using equal weights on the criteria, determine the best alternative.

ii) Use the following set of weights to find a preferred alternative: (.4, .2, .1, 3)

iii) Repeat with (.3,3,.1,.3)

Discuss your results.