Decision Matrix Analysis

00:08:14
https://www.youtube.com/watch?v=j2HtqQjyt5s

Resumo

TLDRThis video introduces decision matrix analysis, a technique used to make well-informed choices by systematically evaluating a set of alternatives against a list of criteria. It distinguishes between a simple decision matrix and a weighted decision matrix. A simple decision matrix scores each option based on criteria and sums these scores to identify the best choice. However, it might not reflect the varying importance of each criterion. Conversely, a weighted decision matrix allows criteria to have different levels of importance, refining the decision-making process by multiplying criteria scores by their respective weights before summing them. The video provides examples, such as choosing a car or a supplier, showing how weighted matrices can prevent impulsive decisions by considering all crucial factors, thus ensuring a more balanced and justified selection process. A downloadable Excel template is offered for those who want to apply these matrices practically.

Conclusões

  • 📊 A decision matrix helps in comparing different options based on set criteria.
  • ⚖️ Weighted decision matrix allows assigning importance to different factors.
  • 🚗 Criteria for decision matrices can include cost, reliability, and performance.
  • 📝 Simple decision matrices sum scores from criteria evaluations.
  • 🛠️ Weighted matrices multiply scores by weights before summing to reflect importance.
  • 🥇 High score options in matrices are considered optimal choices.
  • 🧐 Decision matrices are beneficial for similar options needing objective comparison.
  • 🏢 Useful for business decisions, such as selecting suppliers, with complex factors.
  • 📝 Excel templates for decision matrices are often available for practical application.
  • 🔍 Ensures comprehensive evaluation to prevent impulsive decisions solely based on cost.

Linha do tempo

  • 00:00:00 - 00:08:14

    Today's lesson focuses on decision matrix analysis, a tool to aid in making complex decisions based on several criteria. A decision matrix helps when there are multiple options with no clear choice. Through examples, two types of matrices are explained: simple and weighted. In a simple decision matrix, criteria like cost and reliability are scored, and the option with the highest score is chosen. However, not all criteria have equal importance, which is where a weighted decision matrix is useful, assigning different importance levels to criteria. Business examples show how it helps in choosing suppliers, weighing factors like cost and service. The lesson emphasizes using these matrices for rational decision-making across similar options, with downloadable templates for practice.

Mapa mental

Mind Map

Perguntas frequentes

  • What is decision matrix analysis?

    It is a technique to evaluate and make decisions by considering criteria and options, often used to select the best among similar choices.

  • What is a simple decision matrix?

    It's a tool where you list criteria and options, score each option against criteria, and sum scores to determine the best option.

  • What is a weighted decision matrix?

    It accounts for the relative importance of criteria by assigning them weights, which influence the final score and decision outcome.

  • Why use a weighted decision matrix?

    To account for varying importance of criteria, ensuring a more balanced decision when options have different strengths and weaknesses.

  • What if cost isn't the most important factor when choosing a supplier?

    Using a weighted decision matrix allows prioritizing factors like service level or reliability over cost.

  • How does a weighted decision matrix prevent poor decisions?

    By evaluating options against all criteria with assigned weights, it ensures a comprehensive assessment beyond just cost or surface factors.

  • When should decision matrix analysis be used?

    It's best used when options appear similar and you need an objective approach to decide the most beneficial choice.

  • Can a decision matrix be applied in business decisions?

    Yes, it can be particularly useful in business for tasks such as choosing suppliers by evaluating various important factors.

  • What are some criteria used in a decision matrix for buying a car?

    Criteria might include cost, practicality, performance, reliability, and fuel economy.

  • How can I create a decision matrix?

    Start by listing criteria and options, assign scores, possibly add weightings, and calculate scores to choose the best option.

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Rolagem automática:
  • 00:00:00
    hello and welcome to today's lesson
  • 00:00:02
    where we're looking at decision matrix
  • 00:00:04
    analysis now in this video we will
  • 00:00:07
    define the model in full and then we'll
  • 00:00:09
    take a look at an example
  • 00:00:12
    so each and every day we all make
  • 00:00:15
    decisions some of these decisions are
  • 00:00:17
    simple and don't require much thought
  • 00:00:20
    such as what to wear or what Apple and
  • 00:00:22
    other decisions are more complex and
  • 00:00:25
    they must be considered in light of a
  • 00:00:27
    number of criteria so for example if
  • 00:00:30
    you're buying a new car you might need
  • 00:00:32
    to consider cost practicality
  • 00:00:34
    performance reliability and fuel economy
  • 00:00:37
    now business decisions can be even more
  • 00:00:41
    complex again so suppose you are tasked
  • 00:00:44
    with finding a new facilities management
  • 00:00:47
    supplier it can be tempting to opt for
  • 00:00:50
    the lowest cost supplier but other
  • 00:00:53
    factors need to be considered to ensure
  • 00:00:55
    you make the best decision now this
  • 00:00:57
    might include factors such as the length
  • 00:00:59
    of the contract and in great clauses the
  • 00:01:02
    service level the contractor is going to
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    give you and a whole host of other
  • 00:01:06
    factors as well so given all these
  • 00:01:09
    factors how can we ensure we make the
  • 00:01:12
    best decision
  • 00:01:15
    well the answer to that is a decision
  • 00:01:19
    matrix can help us now it's a very
  • 00:01:21
    useful technique to use when there's a
  • 00:01:24
    number of options to consider but there
  • 00:01:26
    is no obvious clear choice now in this
  • 00:01:30
    video we'll look at two types of
  • 00:01:31
    decision matrices a simple decision
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    matrix and a weighted decision matrix so
  • 00:01:37
    let's start with the simple decision
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    matrix now rather than show you this
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    matrix in an Excel spreadsheet I'm just
  • 00:01:46
    going to explain the concept here if you
  • 00:01:48
    want to get going
  • 00:01:49
    straight away there's a template you can
  • 00:01:51
    download using the link below this video
  • 00:01:56
    now decision matrix can sound like a
  • 00:02:00
    complex term but it's really a very
  • 00:02:01
    simple tool to use
  • 00:02:04
    so in this decision matrix you can see
  • 00:02:06
    here we're trying to decide which car to
  • 00:02:09
    buy now to use the matrix you simply
  • 00:02:12
    follow these steps now in the leftmost
  • 00:02:14
    column of the table lists each of the
  • 00:02:18
    criteria which you wish to evaluate your
  • 00:02:21
    options so some of the criteria for a
  • 00:02:23
    car would be cost practicality
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    performance etc the next thing you need
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    to do is list the options available to
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    you across the top so we have three cars
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    car a car B and car C not very original
  • 00:02:36
    now next you need to choose a way to
  • 00:02:39
    score each each option against the
  • 00:02:42
    evaluation criteria so for example here
  • 00:02:45
    we're using a scale between 1 and 5 were
  • 00:02:48
    5 being a good score and one being a
  • 00:02:52
    very poor score so for example car a has
  • 00:02:56
    very poor reliability but having a 5
  • 00:03:00
    here against cost means it's very
  • 00:03:02
    inexpensive car now the next thing we
  • 00:03:06
    need to do once we've filled in all
  • 00:03:08
    these values is to total them up along
  • 00:03:12
    the bottom here by adding them add in
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    each column up and the option then with
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    the highest score is our winner and our
  • 00:03:20
    decision in effect has been made so you
  • 00:03:23
    can see in this example car 18 is the
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    clear winner because it scores more
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    highly than car B or car a
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    now one of the drawbacks of this simple
  • 00:03:35
    decision matrix is that not every
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    criteria will have the same importance
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    to us so for example we might consider
  • 00:03:43
    reliability to be more important than
  • 00:03:46
    performance well we might consider a
  • 00:03:48
    price to be more important than all the
  • 00:03:50
    other factors put together now to
  • 00:03:52
    overcome this and to take this into
  • 00:03:54
    account we can use a weighted decision
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    matrix
  • 00:04:00
    so just as we did in our simple decision
  • 00:04:03
    matrix we create a table and in the
  • 00:04:06
    leftmost column list the criteria
  • 00:04:08
    against which you wish to evaluate your
  • 00:04:11
    options now to the right of this column
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    we create another column specifying the
  • 00:04:18
    weighting or relative importance of each
  • 00:04:21
    of the criteria using some kind of scale
  • 00:04:23
    so for example here we use the scale of
  • 00:04:26
    1 to 5 where 1 is of little importance
  • 00:04:30
    and 5 is a very important criteria now
  • 00:04:36
    just as before you list the options
  • 00:04:38
    under consideration across the top row
  • 00:04:42
    of the table
  • 00:04:44
    so the next step step 2 is under each
  • 00:04:48
    option we create two rows so want to
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    score the criteria for that option and
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    another to show the total score taking
  • 00:04:57
    into account the weighting so this is
  • 00:05:00
    basically this score here multiplied by
  • 00:05:02
    the weighting so 1 times 1 gives you 1 4
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    times 4 gives you 16 etc
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    and finally in step three we simply add
  • 00:05:13
    up our total score for each option so as
  • 00:05:17
    you can see here option three is the
  • 00:05:19
    best as it has the highest score of 75
  • 00:05:21
    versus option 1 with a score of 55 and
  • 00:05:25
    option 2 which scores 35 so to show how
  • 00:05:30
    a weighted decision matrix can be useful
  • 00:05:32
    in the real world when you're faced with
  • 00:05:34
    a slightly more complicated decision
  • 00:05:36
    let's consider a business example where
  • 00:05:39
    we need to select a supplier for our
  • 00:05:42
    facilities management now in this
  • 00:05:44
    example we've determined here that cost
  • 00:05:47
    is the most important factor to consider
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    when choosing a supplier so we weighted
  • 00:05:52
    it f-fine now other important factors
  • 00:05:56
    but not quite as important as cost
  • 00:05:58
    include service level which we've scored
  • 00:06:02
    pounds of for and ease of termination
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    which we've waited as a for as well
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    now the other factors we decide to use
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    our contract length with shorter length
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    contracts scoring higher and financial
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    strength with companies with greater
  • 00:06:17
    financial strengths scoring higher and
  • 00:06:21
    when we wait our decision matrix like
  • 00:06:23
    this then we may end up with a result
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    like this now what's really interesting
  • 00:06:30
    here is that although cost is our most
  • 00:06:34
    important factor the company which has
  • 00:06:39
    actually probably the highest cost
  • 00:06:41
    because the score isn't so good actually
  • 00:06:43
    comes out on top overall and the reason
  • 00:06:46
    for that is because yes the cost is
  • 00:06:49
    higher but the service level is going to
  • 00:06:51
    be excellent and the ease of termination
  • 00:06:53
    is excellent as well certainly much
  • 00:06:56
    better and the score as you can see here
  • 00:06:59
    for the contractor where their cost so
  • 00:07:02
    this example really highlights why it's
  • 00:07:04
    a good idea to use a weighted decision
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    matrix because it prevents us from you
  • 00:07:10
    know jumping straight in and going with
  • 00:07:12
    company because they have the lowest
  • 00:07:13
    price it forces us to evaluate all of
  • 00:07:16
    the companies against all of the
  • 00:07:19
    criteria according to some weighting
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    enabling us to make the best
  • 00:07:23
    decision so don't forget if you'd like
  • 00:07:27
    to get started creating your own
  • 00:07:29
    decision matrix you can download the
  • 00:07:32
    decision matrix template in Excel using
  • 00:07:35
    the link below this video
  • 00:07:37
    so in summary decision matrix analysis
  • 00:07:41
    enables you to make a rational decision
  • 00:07:44
    from the number of similar options it's
  • 00:07:47
    best to use the tool when the options
  • 00:07:49
    look fairly similar to each other yet
  • 00:07:51
    you want to objectively decide which is
  • 00:07:54
    the better best option so by using the
  • 00:07:56
    tool you ensure all important factors
  • 00:07:59
    are being considered before an option is
  • 00:08:01
    selected
  • 00:08:02
    and thus it prevents you from
  • 00:08:04
    potentially jumping to the wrong option
  • 00:08:07
    so that's it for today's lesson really
  • 00:08:10
    hope you enjoyed it and I look forward
  • 00:08:12
    to speaking to you again soon
Etiquetas
  • decision making
  • decision matrix
  • weighted matrix
  • business decisions
  • criteria evaluation
  • decision tools
  • rational choice
  • analysis technique