BMGT 317 UMD Decision Matrices in Decision Making Paper MDQ STEP FOUR AND FIVE: DECISION MATRICES AND FINAL DECISION The purpose of Week 7’s Brainstorming

BMGT 317 UMD Decision Matrices in Decision Making Paper MDQ STEP FOUR AND FIVE: DECISION MATRICES AND FINAL DECISION

The purpose of Week 7’s Brainstorming Discussions is to Evaluate and Make the Decision by comparing the alternatives based on the objectives. This process is achieved in Step Four by creating two decision matrices – unweighted and weighted. Step Five involves Assessing the Decision Process, which is where the manager will state the final decision and how it fulfills PPO’s objectives by examining the MDQ process in how that final decision was derived.

1. By WEDNESDAY, complete the following:

All conclusions, justifications, reasonings, and explanations must be supported with course material in the form of APA in-text citations (page/paragraph numbers required) and a reference list.
Explain the purpose in using decision matrices in Step Four of the MDQ.
Use a scale of 0 – 3 to rate the first decision matrix. 0 being does not meet the objective well to 3 being meets the objective well.
The decision matrices must have the four objectives and four alternatives from the previous week’s discussions.
Post the first decision matrix in the text box (unweighted). Do NOT use attachments. Explain WHY and HOW the manager derived the ranking of the objectives and alternatives (each of the individual numbers) in the first matrix. Note: Watch the video in the course material for instructions on how to complete the matrices AND Example using MDQ: Which House Do We Purchase?
Use weights that total to 100% for the second decision matrix.
Post the second decision matrix in the text box (weighted). Explain WHY and HOW the manager derived each of the weights for the objectives.
Based on the results of the Decision Matrices, evaluate and analyze all of PPO’s alternatives and objectives.
State the final decision by explaining and justifying it with the numbers in the matrix. The final decision is based on the matrices!
Discuss Step Five: The Final Decision. Explain HOW the final decision (chosen alternative) fulfilled PPO’s objectives.

2. THROUGHOUT the week, complete the following:

Read your classmates’ post and provide constructive feedback four or more days throughout the week.

3. FINAL POST, complete the following:

Attach your final post in the classroom by Sunday 11:59 PM ET
The final post must reflect the brainstorming activities and should be different than the Wednesday initial post.
The final post must include a variety of sources from the class material as well as the use of scenario or case study facts where appropriate.

Reference:

Measuring Decision Effectiveness

Three Steps to Building a Decision Matrix

Evaluating the Alternatives Applying Sound Reasoning Episode 15 Making a decision on purchasing a house using the MDQ decision making model
Using a decision making model allows us to objectively make a decision by considering all of the variables. If you
want to buy a house, you must figure out what it is you wish to find in a house before going to a realtor to search for
possibilities. With limited time, you would not look at every single house on the market or waste your time looking at
houses that do not meet your needs.
The decision statement for this decision, that needs to be made would be:
Which house should we purchase?
Objectives need to created. What do you want in this house? What do the other people in my family want in this
house? Create a wish list of all the things everyone is looking for in this house (Stakeholders). The list may have 20
things, which would need to be narrowed down to a reasonable number of objectives (wish list), by deciding what is
most important and what sacrifices you are willing to make.
Let us narrow it down to six objectives, which is a reasonable number for this example. I want: at least 3 bedrooms,
at least 2 bathrooms, 2 car garage, a basement area, no more than 5 miles from the elementary school (no school
commute for kids), and an up to date kitchen. All of these objectives are measurable because the houses we are
considering either have these things or not. There are no gray areas or subjectivity. Even the realtor is clear on what
you want. Obviously, none of those houses have all six of these objectives, which is reason we are trying to decide
using the MDQ Model. If one of the houses did have all six objectives, there would be no decision to make nor a
need for a decision making model.
To buy a house can not be one of the objectives! Any alternative (all six of the houses) would or should
accomplish the objective of buying a house. The decision statement of “which house do we purchase” already
implies you are buying a house. It is obvious you are looking to buy a house based on your decision statement
because the decision you are trying to make is which house to buy not whether you should buy a house. Therefore,
to buy a house can not be one of the objectives because all alternatives will assumably satisfy this objective.
You should not create an alternative that does not satisfy buying a house. If you do, that means you applied the
model incorrectly nor understood your decision statement. This is the reason in this course, students spend four
weeks on the MDQ. You need to go step by step, understanding the reasons for the decision statement and specific
objectives.
After justifying the objectives, you need to create a list of alternatives that will be used to accomplish the objectives.
Brainstorm, research online, ask the realtor for applicable listings (houses that have some of your objectives) and go
see some of these houses. In considering many alternatives, you decide to narrow down six possible alternatives
(houses with street addresses or nicknames such as 123 Main Street, 456 Clark Road, etc.) to choose from and
apply to the MDQ model.
Once you know your objectives and alternatives, it is time to create the decision matrices. The first decision matrix
would include six objectives and six alternatives. That would be a reasonable decision matrix to use in evaluating the
situation. The complexity in having six objectives and six alternatives is the reason you are using the decision
making model.
In creating the first matrix, rate each of the alternatives against each of the objectives in terms of their importance. In
other words, come up with numbers for each of the boxes in the first matrix. Only the decision maker knows how or
why an objective was rated with a specific number for each of the alternatives. Your logic as the decision maker may
vary from a different decision maker. This is the reason in your project, you have to explain how the numbers were
derived and support them so that your logic is clear to someone looking at the matrices. Matrices are not selfexplanatory.
For example (first decision matrix table), using a scale of 0 – 3, you would rank 123 Main Street (alternative) to at
least 3 bedrooms (objective). How well does 123 Main Street meet the objective of at least 3 bedrooms? 123 Main
Street has 4 bedrooms. Therefore, you might rate it as a “3” and in your explanation express the fact you gave it this
ranking because the house has 4 bedrooms. This house meets the objective very well because it has one additional
bedroom beyond what the wish was and it more than satisfies the family. Nothing is considered obvious in the
decision matrix because the table creator is the one doing the analysis. For your project, you are required to provide
support and detailed explanations by using the case study facts, course material and additional research. A
Same process in creating the weights for the second matrix. The second matrix uses weights. What if I cannot find a
house that meets every objective? Most likely this will happen to you. Which objectives are more critical than the
others? For example, if the kids are starting elementary school, that objective may be more significant at this time
than if they were in their last year of high school. Out of the six objectives, you may give the elementary school a
weight of 30%, because this is most important to you. Similarly, bathrooms 20%, bedrooms 20%, basement 15%,
kitchen 5%, and 2 car garage 10%. Why? This is the part you have to explain in great detail in Project 1. Each of
those associated weights/percentages must be explained, justified, and supported based on facts from the palm oil
case study, course articles, additional research, and MDQ application process.
Once you have completed this entire process, examine both matrices, to see what the final decision is for the
decision that needs to be made. Based on the results, you would justify how the chosen alternative meets more of
the objectives than the other alternatives. The matrices dictate the final decision, which is based on the final
numbers.
Step-by-Step Application:
Decision statement is “Which House Do We Purchase”.
Objectives: What do you want or desire? 3 Bedrooms, 2 Bathrooms, 2 Car Garage, Basement, School Distance, Up
to date Kitchen
Alternatives: How will you accomplish what you want in terms of what houses are you considering of purchasing?
123 Main Street, 456 Clark Road, etc…..
Decision Matrices
Matrix One (unweighted):
The resulting table (with the first house you visited scored): First Decision Matrix
House
3 BR
2 Baths
2 car garage
Basement
School Dx
Kitchen
Total Value
123 Main St
3
2
0
1
2
1
9
456 Clark Rd
3rd Alternative
4th Alternative
5th Alternative
6th Alternative
For your project on PPO, you will need to explain each of the numbers in the first decision matrix by supporting how
you logically scored each box. For example, the numbers showing in the first row for 123 Main Street – 3,2,0,1,2,1 –
all have to be explained individually. The same will be required for 456 Clark Road, 3rd alternative, and so on.
Now you are going to add the WEIGHTS you have decided on for each of these six objectives: Total of the weights
should equal 100%.
Matrix Two (weighted):
House
3 BR
2 Baths
2 car garage
Basement
School Dx
Kitchen
Total Value
123 Main St
3 x 20%
2 x 20%
0 x 10%
1 x 15%
2 x 30%
1 x 5%
1.8
456 Clark Rd
3rd Alternative
4th Alternative
5th Alternative
6th Alternative
The first number is the value of that factor for a specific house based on the first matrix. The second number is the
weight you have assigned that factor (its importance in %). Multiply the two numbers. Put the total at the end of each
row.
Fill in the value for each of six houses you visit, and the highest score is the one you should buy. Why? Because the
numbers in the table dictate which alternative satisfies as many of your objectives, based on your importance of
each objective. This same thought process and application of the MDQ will be used for Project 1, in deciding which
alternative PPO should choose (the final decision).
BRAINSTORMING CASE STUDY WEEKS 4 – 7
Endangered Orangutans and the Palm Oil Industry
Purpose
In weeks 4 – 7, you will be using this case study to evaluate the business decision Megat
needs to make to keep his company a viable commercial opportunity The purpose of
these brainstorming exercises is to develop the critical thinking and decision making
skills necessary to make a contemporary business decision. Along with critical thinking
skills, you will develop research, communication and data evaluation skills.
Outcomes You Will Meet by Completing the brainstorming exercises in weeks 4 7:
•
applies the basic steps of the MDQ model to make a sound business decision
•
describes and explain the reasoning behind the application steps used and the
ultimate decision
•
demonstrate the use of collaboration to help determine the final decision
•
analyze, evaluate and explain both the decision factors in making the decision as
well as the stakeholders involved
Setting the Stage
Palm oil is the most widely consumed vegetable oil on Earth. Referred to as the “Miracle
Crop” (Wan, 2017) it can be found in seventy-one percent of most supermarket food
products like pizza and doughnuts, 24 percent of cosmetic products like lipstick and
makeup, and five percent for energy uses like heating fuel (Deutsch bank, 2015).
Known as a super food, the demand for palm oil is already high, and it is expected to
triple by 2050 (Deutsch Bank (db), 2015).
Currently Malaysia, Indonesia and India produce 50 of the 56 million tons needed to
meet international consumer demand. While the production of Palm Oil promotes
economic development badly needed in these countries, it does not come without
serious environmental and social consequences (Deutsch Bank(db), 2015).
One prominent side effect of the deforestation caused by the rapid growth of palm oil
production is the reduction of the Orangutan population. It is estimated that over fifty
thousand Orangutans died because of palm oil production in the last 20 years. It is also
estimated that 2,000- 3,000 die every year (Orangutan. n.d.). The guesstimates by
experts suggest that in the next 30-50 years those found in the wild will be
extinct. Environmentalists are attempting to stave off the extinction by creating refuges
on nearby islands and transporting the remaining Orangutans from Borneo (where most
Orangutans have traditionally lived) to the sanctuaries (Emont, 2017).
Orangutans are not the only victims of the increased number of palm oil plantations, but
humans also suffer from the side effects. A study estimated that 91,600 people in
Indonesia, 6,500 in Malaysia and 2,200 in Singapore may have died prematurely
because of exposure to fine particle pollution from burning forests (France-Presse,
2016).
The large destruction of rain forests by plantation owners and its effect on global climate
is also a serious problem brought about by palm oil production. Deforestation is a
significant contributor to climate change; when the forests are lost, carbon is released
into the atmosphere, causing the climate to heat up. Clearing the land to plant the new
crop is often done by burning timber and undergrowth putting significant amounts of
smoke into the air which releases carbon dioxide in large amounts. In Indonesia and
Malaysia, much of the land is on tropical peat soil. The richness of the holds carbon.
Clearing the land releases that carbon into the atmosphere, which contributes to global
warming (Perils of Palm, 2018).
In the last years environmentalists have actively attempted major campaigns to bring
awareness of the problems related to palm oil production and have taken a variety of
approaches.
One approach is to demand companies stop using palm oil altogether. The Say No to
Palm Oil group states “We think that consumers should focus on cutting down
unnecessary consumption in general, thus removing some palm oil and other vegetable
oils from their lifestyle.” (Fassler, 2016). Those opposed to this approach suggest that
considering the number of products that contain palm oil ridding it from the ingredient
list or reducing it will likely just switch the burden on to another oil crop whose side
effects are worse. No other crop can yield even a third as much oil per acre and use
less land. Pesticide use in palm oil production is also considerably less (Fassler, 2016).
Another approach is to the problem is for user companies to buy only sustainable palm
oil. NGO’s and corporations in Europe and America, two of the largest communities of
palm oil consumers, have taken some steps to comply to this demand by creating the
Roundtable on Sustainable Palm Oil. This organization has set out a certification
process for palm oil production in compliance with a set of environmental and social
criteria (Roundtable, 2018). However, organizations like Greenpeace (Moas, 2013) and
the Rainforest Action Network (Tillack, 2013) complain that the organization’s
standards are not strong enough and that even certified sustainable palm oil can
contribute significantly to deforestation and its climate and health effects.
A third approach has been for environmental activists to stage protests, boycotts and
petition drives to make corporations and their consumers aware of the side-effects that
are produced by palm oil. These activities have resulted in many companies like
General Mills, Mondelez International and J.M. Smucker company to adapt policies on
Palm Oil use in their products. However, as pointed out by the Conservation
International group in their Consumer Guide, the source to market problems make
certification difficult “Complexity and fragmentation in the palm oil supply chain present
challenges to consumer goods manufacturers and retailers seeking to implement
sustainable sourcing commitments.” (Drummond, 2015 p.15)
The rapid expansion of palm oil production in Southeast Asia endangers orangutans
and humans, destroys virgin rain forests and contributes to climate change. It also is
one of the most profitable products for the Southeast Asian and global economies. As
noted by Sustainability Policy Transparency Toolkit group, “Palm oil is one of the
most profitable land uses in the tropics. For the main producing countries, palm oil can
significantly contribute to national economies, driving rapid economic growth and
contributing to the alleviation of rural poverty.” (SPOTT, 2016). The question then
becomes; what role does the plantation owner play in the preservation of the company’s
income while dealing with competing societal concerns?
Business Background
PPO is a small family-owned business which began in 1998. Owned by Tan Megat,
PPO has three Palm Oil Plantations in Borneo in the Kilimaten region. The first of PPO’s
plantations planted in 1998 is 1500 hectares in size and yields 6.5 tons per hectare. The
second plantation planted in 2006 is 2,000 hectares and yields 7.25 tons per hectares.
The newest plantation is only 6 years old and is the biggest at 3,500 hectares. The yield
is only 3.5 tons per hectares owning to the immaturity of the trees. Currently Megat has
all his production under contract for the next two years. PPO’s current revenue annually
is $24,090,000 US Dollars. Down 9.2 percent from last year. Since Palm Oil is a
commodity the prices can fluctuate from month. Contracts are paid based on the price
noted on the market for the transaction date of sale
Palm trees typically begin flowering and producing fruit after 3-4 years and yield well
enough after 6-8 years for the owner to return a profit. Oil palm plantations generally
remain profitable for 25 years, after which they need to be replanted. Peak palm oil
yields occur anywhere between 10 to 18 years of age, and gradually decline thereafter.
As a plantation ages it also tends to experience declining tree populations because of
pests and diseases. Newly established plantations might have 130-145 trees per
hectare, whereas an old plantation might be reduced to approximately 100 trees per
hectare. The huge start-up costs and long lead time between plantation establishment
and profitability are huge impediments to independent small farmers in Indonesia. And
that is precisely why the government has had to provide substantial long-term capital
and subsidies to smallholders to ensure they can participate in the industry. IPOC,the
government regulatory board, indicates that roughly 98 percent of all smallholder palm
farmers have successfully paid off their loans in the past 10 years. This is in fact the
case for PPO.
So, PPO is now faced with the following financial situation:
•
•
•
They have paid off their loans.
They have the 1998 plantation coming to the end of its production numbers
because of the age of the trees. The plantation will have to be replanted in five
years. Leaving a 6 to 8-year gap where the plantation will not be productive and
high costs for replanting will have to be absorbed.
The second oldest plantation is beginning to reach the peak time for productivity
but in 6 more years the trees will begin to reach full maturity and production will
decline.
•
•
•
•
The largest plantation is immature and will not bring in a strong yield for another
3 to 4 years.
While prices are still strong the market is going down.
PPO has not received its government certification as a sustainable producer
because it is not yet able to pay the costs of needed changes for qualification
(estimated at 1 million dollars) having just repaid its government loans.
The loss of contracted customers would threaten his financial success.
Dilemma:
Consumers Against Palm Oil (CAPO) has recently taken to targeting your business,
Pacific Palm Oil (PPO). It is the mission of the group to go to all Palm Oil Producers
and publicly attack, using protests and picketing tools, what they do to bring attention to
the plight of the orangutan’s natural habitat as well as the other harm done by the
production process including human mortality. The group also encourages customers to
reduce consumption of the product through boycotts of palm oil by pressuring the
brands we buy to use only sustainable palm oil.
Some of PPO’s big American customers have approached Megat to find out what he
intends to do about the problem and have hinted that they may have to seek out a
sustainable palm oil producer if Megat cannot provide some assurance that he
is addressing the problem.
Instructions:
You are Tan Megat’s plantation production manager. Megat wants to turn over running
the main business to you but he wants to see how you make a decision of this
magnitude first. You have been tasked by Megat to decide what to do about the CAPO
situation. When the protesting started several weeks ago you decided to investigate
the CAPO’s philosophy and strategy in their attempt to bring down the Palm Oil
Industry. The information you acquired is recounted accurately in the “Setting the
Stage” area of this case study. That material including the reference list, will provide a
good start to looking at the decision facing PPO. Below is some additional research that
you have reviewed. More research may be needed later as you begin to apply the
MDQ.
•
•
•
•
•
Harvesting Palm Oil and Rain Forests
Blazes in Southeast Asia May Have Led to Deaths of Over 100,000, Study Says
Indonesia’s Orangutans Suffer as Fires Rage and Businesses Grow”
Southeast Asia, Choking on Haze, Struggles for a Solution”
The Violent Costs of the Global Palm-Oil Boom
Reference List
Economic impacts. (n.d.). Retrieved from https://www.spott.org/palm-oilresource-archive/impacts/economic/
Emont, J. (2017, April 25). A Refuge for Orangutans, and a Quandary for
Environmentalists. Retrieved
from https://www.nytimes.com/2017/04/25/world/asia/indonesia-borneoorangutans-palm-oil.html
Drumm…
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