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MGMT20005 Business Decision Analysis

Tutorial 4: Scoring Model and AHP

Case Problem 1: Investment Property (Scoring model)

A real estate investor is interested in purchasing condominium property in Geelong. The three most preferred condominiums, criteria weights, and rating information are listed. Using the Scoring model, which condominium is recommended?

Case Problem 2: Manufacturer Selection (AHP)

Gill, a designer, must decide which of the three manufacturers will develop his new toothbrush product. Three factors are important to Gill: (1) price, (2) reliability of the product, and (3) delivery time of the orders. The three manufacturers are Cornell Industries, Brush Pik, and Picobuy. Cornell Industries will sell toothbrushes to Gill for $100 per gross, Brush Pik for $80 per gross, and Picobuy for $144 per gross.

Gill has decided that in terms of price, Brush Pik is moderately preferred to Cornell and very strongly preferred to Picobuy. In turn, Cornell is strongly to very strongly preferred to Picobuy.

Gill has determined that for reliability, Cornell is very strongly preferable to Brush Pik and equally preferable to Picobuy. Also, Picobuy is strongly preferable to Brush Pik.

Gill has determined that for the delivery time, Cornell is equally preferable to Picobuy. Both Cornell and Picobuy are very strongly to extremely preferable to Brush Pik.

The accounting department of Gill’s company has determined that in terms of criteria, price is strongly to very strongly preferred to delivery time and Reliability is moderately preferred to Price and that reliability is very strongly preferable to delivery time.

Using a Nine-Point Scale (1: Equally preferable, 7: Extremely preferable), (1) Calculate the consistency ratio and determine if the judgments provided are consistent, and (2) Compute the AHP priorities, and determine which manufacturer would be recommended?