W6_Stephon_CAR ACQUISITION DECISION

1                   Problem or Opportunity Statement

An individual who needs to make an urgent personal vehicle decision is not very solvent at a point. Reliability and ruggedness are also pertinent points to of interest considering the assignments the vehicle is intended for.

                   

                    

2                   Development of Feasible Alternatives

The alternative actions for consideration here are to purchase a replacement engine for the existing SUV and carry out some general overhaul, buy a fairly used SUV, buy a brand new sedan. For this decision process, we intend to use the additive weighting technique, a compensatory (single dimensional) model.

                    

3                   Development of the Outcomes for Each Alternative

Below is the table of alternatives, their attributes and the ratings assigned to them.

                    

Alternatives   Attributes	Engine replacement and overhaul of existing SUV	Buy a fairly used SUV	Buy a brand new compact category sedan
Reliability	Fair	Good	Excellent
Fuel Economy	Poor	Fair	Excellent
Ruggedness  (due to bad roads)	Good	Excellent	Poor
Acquisition Cost (USD)	2,025.32	20,886.08	22,151.90
Lead time (days)	14	2	2
Running/Maintenance Cost first yr(USD)	3,802.69	2,318.35	946.21

                    

                    

We need to make all ratings of the attributes dimensionless. The conversion will be done as follows.

 

To convert attributes where the larger values are less desirable, the following formula will be used:

Rating = Worst Outcome – Outcome being converted/Worst Outcome – Best Outcome

 

To convert attributes where the larger values are more desirable, the following formula will be used:

Rating = Outcome being converted – Worst Outcome/Best Outcome – Worst Outcome

 

 

Alternatives   Attributes	Engine replacement and overhaul of existing SUV	Buy a fairly used SUV	Buy a brand new compact category sedan
Reliability	0.3	0.7	1.0
Fuel Economy	0.0	0.3	1.0
Ruggedness  (due to bad roads)	0.7	1.0	0.0
Acquisition Cost (USD)	1.0	0.06	0.0
Lead time (days)	0	1	1
Running/Maintenance Cost first yr(USD)	0.0	0.52	1.0
TOTALS	2.0	3.6	4.0

 

                    

We would then rank the attributes according their importance in the decision making process and normalize these rankings by dividing each by their total sum to obtain weights for each. Finally the attribute ratings will be multiplied by the obtained weights.        

                    

 

The following table shows the resultant values after conversion.

 

Alternatives   Attributes	Rankings	Weights	Engine replacement and overhaul of existing SUV		Buy a fairly used SUV		Buy a brand new compact category sedan
			Rating	Weighted	Rating	Weighted	Rating	Weighted
Reliability	5	0.24	0.3	0.1	0.7	0.2	1.0	0.2
Fuel Economy	2	0.10	0.0	0.0	0.3	0.0	1.0	0.1
Ruggedness  (due to bad roads)	4	0.19	0.7	0.1	1.0	0.2	0.0	0.0
Acquisition Cost  (USD)	6	0.29	1.0	0.29	0.06	0.02	0.0	0.0
Lead time (days)	3	0.14	0	0	1	0.14	1	0.14
Running/Maintenance Cost first yr (USD)	1	0.05	0.0	0.0	0.52	0.02	1.00	0.05
TOTALS	21			0.5		0.6		0.5

 

                    

                    

4                   Selection of the Acceptable Criteria

The alternative with the highest total weighted score total will be selected above other alternatives.

                    

5                   Analysis and Comparison of the Alternatives

Given the analysis above, the second alternative (buy a fairly used SUV) has a higher total score than the other two alternatives which have the same total score approximately.

                    

 

 

 

6                   Selection of the Preferred Alternative

After our analysis and the selection criteria stated above, the alternative of choice is the second (buy a fairly used SUV). The third alternative (buy a brand new sedan) score higher than the other without the weights but after the weights where applied, the second alternative scored highest

                    

7                   Performance Monitoring and Post-Evaluation of Results

The most important consideration for us here is the acquisition cost which is a one-off fixed expense, reliability and ruggedness which come as inherent characteristics of the vehicle of choice. We would watch to see that our initial cost of acquisition does not exceed our budgeted cost and also monitor the vehicle during use for reliability.

 

 

                References:

i.     Sullivan, W. G., Wicks, E. M. & Koelling C. P. (2012).  Engineering Economy Fifteenth Edition. Chapter 14

ii.    Giammalvo, P.D. (2012). AACE Certification Preparation Course Module

iii. National Institute of Standards and Technology – U.S. Department of Commerce Technology Administration. (1995). Multiattribute Decision Analysis Method for Evaluating Buildings and Building Systems (Publication No. NISTIR 5663). Gaithersburg, Maryland 20899.