W7_Mohammed_Building my house using the decision making multiattributes

Problem definition

Referring to my W6 blog, the CfH is challenging me as to take the same case study (building my house) and to go to Chapter 14 and evaluate this case study by the using of multi-attribute decision making. I will pick a minimum of two different approaches to see if they produce the same results or not.

Development of the feasible alternatives

Option 1. End of 2012

Option 2. End of 2013

Option 3. End of 2014

Develop the outcomes for each alternative

As per the recent Sudan economical situation by the Sudanese central bank, one US Dollars (USD) equal to 5.5 Sudanese Pound (SDG). My roughly estimation for construction one story house is not less than 65,000USD, Here is the evaluation of my possible choices to start the construction of my house considering my possible savings in the beginning of the construction and then the balance could be through bank installments (bank financing is not considered in this analysis, since the duration for construction is equal among the given alternatives), the plan could be started by end of 2012, 2013, or 2014

 

Accepted Criteria

By using of the multi-attribute decision making, the best choice will be choosed considering this tool will demonstrate how the attributes that arise from multiple objectives can be explicitly included in the evaluation of engineering and business ventures.

Analysis and comparison of the alternatives

Table 1-1 Summary of information for the given options

Attribute	Construct the house by end of 2012	Construct the house by end of 2013	Construct the house by end of 2014
Interest Rate	Low	Moderate	High
Saving Situation	Low	Moderate	Excellent
Inflation	High	Moderate	Low
Cost of rental	Low	Moderate	High
Changing in governmental polices	Low	Moderate	High
Family satisfaction	High	Moderate	Low

Selection of the preferred alternatives

      A -  Nondimensional Scaling for the given options

Attribute	Value	Rating Procedure	Dimensionless Value
Interest Rate	Low	(1-1)/2	1.0
(relative rank-1)/2	Moderate	(2-1)/2	0.5
	High	(3-1)/2	0.0
Saving Situation	Low	(1-1)/2	0.0
(relative rank-1)/2	Moderate	(2-1)/2	0.5
	High	(3-1)/2	1.0
Inflation	Low	(1-1)/2	1.0
(relative rank-1)/2	Moderate	(2-1)/2	0.5
	High	(3-1)/2	0.0
Cost of Rental	Low	(1-1)/2	1.0
(relative rank-1)/2	Moderate	(2-1)/2	0.5
	High	(3-1)/2	0.0
Changing in governmental	Low	(1-1)/2	1.0
Polices	Moderate	(2-1)/2	0.5
(relative rank-1)/2	High	(3-1)/2	0.0
Family satisfaction	Low	(1-1)/2	0.0
(relative rank-1)/2	Moderate	(2-1)/2	0.5
	High	(3-1)/2	1.0

      B - Applying of Lexicography

Ordinal Ranking of years attributes:

Attribute	Rank
A-Result of Paired Comparisons
Interest Rate > Inflation	Interest Rate more important than Inflation
Interest Rate > Change in governmental polices	Interest Rate more important than  Change in governmental polices
Saving Situation > Interest Rate	Saving Situation more important than  Interest Rate
Saving Situation > Inflation	Saving Situation more important than  Inflation
Saving Situation > Cost of rental	Saving Situation more important than  Cost of rental
Saving Situation > Change in governmental polices	Saving Situation more important than  Change in governmental polices
Saving Situation > Family Satisfaction	Saving Situation more important than  Family Satisfaction
Inflation > Change in governmental polices	Inflation more important than  Change in governmental polices
Cost of Rental > Interest Rate	Cost of Rental more important than  Interest Rate
Cost of Rental > Inflation	Cost of Rental more important than  Inflation
Cost of Rental > Change in governmental polices	Cost of Rental more important than  Change in governmental polices
Family Satisfaction > Interest Rate	Family Satisfaction more important than  Interest Rate
Family Satisfaction > Inflation	Family Satisfaction more important than  Inflation
Family Satisfaction > Cost of Rental	Family Satisfaction more important than  Cost of Rental
Family Satisfaction > Change in governmental polices	Family Satisfaction more important than  Change in governmental polices
B-Attribute	Number of time on left > (=Ordinal Ranking)
Interest Rate	2
Saving Situation	5
Inflation	1
Cost of rental	3
Change in governmental polices	0
Family satisfaction	4

Attribute	Rank	Alternative Rank
Interest Rate	2	2012 > 2013 > 2014
Saving Situation	5	2014 > 2013 > 2012
Inflation	1	2014 > 2013 > 2012
Cost of rental	3	2012 > 2013 > 2014
Change in governmental polices	0	2012 > 2013 > 2014
Family satisfaction	4	2012 > 2013 > 2014

Rank of 5 = most important, Rank of 0 = least important

Selection of the preferred alternatives

      A - Calculation of the best choice, Nondimensional Scaling

Attribute	Construct the house by end of 2012	Construct the house by end of 2013	Construct the house by end of 2014
Interest Rate	1.0	0.5	0.0
Saving Situation	0.0	0.5	1.0
Inflation	0.0	0.5	1.0
Cost of rental	1.0	0.5	0.0
Changing in governmental polices	1.0	0.5	0.0
Family satisfaction	1.0	0.5	0.0
SUM =	4.00	3.00	2.00
	Best Choice

      B -  Result using the Lexicography model: Since the Saving Situation is top-ranked attribute and 2014 savings is the best of all years, then the selection would be 2014.

Performance monitoring and the post evaluation of results

The inflation rate together with my overall savings should be followed closely as to refine those results prior to start immediately with the given option.

Conclusion

By using of the Nondimensional Scaling the best choice to build my house is by end of 2012, however by using of Lexicography the best selection is 2014. Its worth mentioning that lexicography is matching the result given by using of the present and future equivalent values of single cash flows.

References

* Engineering Economics-Fifteen Edition, chapter 14, Decision Making Considering Multiattributes, Compensatory Models, page 556 - 562.

* W6 Blog, Mahakam AACEI Team, W6_MR_ when should i start building my house, http:/ aacemahakam.blogsopt.com/