Reflect on how you would make a decision by identifying several important criteria, their weights, and the scoring of several alternatives. Explain which alternative would be preferred according to the Bayesian approach, and which would be preferred by a conjunctive approach. Which would be more appropriate and why?
Winter is coming, and it tends to be very cold where I live. Recently I’ve been looking for a winter coat, and decided to discuss this purchase in the Learning Journal this week. When making a decision to buy a winter coat, several important criteria can be considered, such as price, warmth, style, durability, and brand reputation. The weights assigned to these criteria may vary depending on personal preferences and priorities. The following weights are my criteria:
– Price: 0.3
– Warmth: 0.4
– Style: 0.2
– Durability: 0.05
– Brand Reputation: 0.05
Now, let’s consider three alternatives and score them based on these criteria:
Alternative 1:
– Price: 350元
– Warmth: 8/10
– Style: 7/10
– Durability: 9/10
– Brand Reputation: 6/10
Alternative 2:
– Price: 400元
– Warmth: 9/10
– Style: 9/10
– Durability: 7/10
– Brand Reputation: 8/10
Alternative 3:
– Price: 380元
– Warmth: 7/10
– Style: 6/10
– Durability: 9/10
– Brand Reputation: 9/10
To determine the preferred alternative using the Bayesian approach, we calculate the overall score for each alternative by multiplying the criteria scores with their respective weights and summing them up (Kai & Nagpurnanand, 2007):
Alternative 1 score = (0.3 * 350) + (0.4 * 8) + (0.2 * 7) + (0.05 * 9) + (0.05 * 6) = 105 + 3.2 + 1.4 + 0.45 + 0.3 = 110.35
Alternative 2 score = (0.3 * 400) + (0.4 * 9) + (0.2 * 9) + (0.05 * 7) + (0.05 * 8) = 120 + 3.6 + 1.8 + 0.35 + 0.4 = 126.15
Alternative 3 score = (0.3 * 380) + (0.4 * 7) + (0.2 * 6) + (0.05 * 9) + (0.05 * 9) = 114 + 2.8 + 1.2 + 0.45 + 0.45 = 118.9
According to the Bayesian approach, the preferred alternative would be Alternative 2 since it has the highest overall score.
On the other hand, the conjunctive approach focuses on setting minimum acceptable levels for each criterion and selecting the alternative that meets or exceeds all of them (Monach University, n.d.). Let’s assume the following minimum acceptable levels:
– Price: 350元
– Warmth: 8/10
– Style: 7/10
– Durability: 8/10
– Brand Reputation: 7/10
Based on these minimum acceptable levels, Alternative 1 fails to meet the durability criterion, so it would be eliminated from consideration.
Both approaches have their merits, but in this scenario, the Bayesian approach seems more appropriate. It considers the relative importance of each criterion by assigning weights and provides a comprehensive overall score for each alternative. The conjunctive approach, while useful in some cases, may eliminate alternatives that excel in certain criteria but fall slightly short in others, potentially missing out on a better overall choice.
References
Kai L., Nagpurnanand R. (2007). Handbook of Empirical Corporate Finance. Retrieved from http://www.untag-smd.ac.id/files/Perpustakaan_Digital_1/CORPORATE%20FINANCE%20Handbook%20of%20corporate%20finance%20empirical%20corporate%20finance.pdf
Monach University. (n.d.). Conjunctive Model (of Brand Evaluation). Retrieved from https://www.monash.edu/business/marketing/marketing-dictionary/c/conjunctive-model-of-brand-evaluation