Steps 3, 4, and 5. In many decision-making situations, the criteria are not all equally important.6 So, the decision maker has to allocate weights to the items listed in step 2 in order to give them their relative priority in the decision (step 3). A simple approach is to give the most important criterion a weight of 10 and then assign weights to the rest against that standard. Thus, in contrast to a criterion that you gave a 5, the highest-rated factor is twice as important. The idea is to use your personal preferences to assign priorities to the relevant criteria in your decision and indicate their degree of importance by assigning a weight to each. Exhibit 4–2 lists the criteria and weights that our manager developed for her vehicle replacement decision. What is the most important criterion in her decision? Price. What has low importance? Performance and handling.

Then the decision maker lists the alternatives that could successfully resolve the problem (step 4). No attempt is made in this step to evaluate these alternatives, only to list them.7 This is the step where a decision maker may need to be creative, a topic we’ll discuss later in the chapter. (Also, see the Management Skill Builder at the end of the chapter.) Let’s assume in our example that our manager identifies 12 cars as viable choices: Jeep Compass, Ford Focus, Hyundai Elantra, Ford Fiesta SES, Volkswagen Golf GTI, Toyota Prius, Mazda 3 MT, Kia Soul, BMW i3, Nissan Cube, Toyota Camry, and Honda Fit Sport MT.

Once the alternatives have been identified, the decision maker critically analyzes each one (step 5). How? By evaluating it against the criteria. The strengths and weaknesses of each alternative become evident as they’re compared with the criteria and weights established in steps 2 and 3. Exhibit 4–3 shows the assessed values that the manager assigned each of her 12 alternatives after she had test-driven each car. Keep in mind that the ratings shown in Exhibit  4–3 are based on the assessment made by the sales manager. Again, we’re using a scale of 1 to 10. Some assessments can be achieved in a relatively objective fashion. For instance, the purchase price represents the best price the manager can get online or from local dealers, and consumer magazines report data from owners on frequency of repairs. Others, like how well the car handles, are clearly personal judgments.

Personal judgments by a decision maker are reflected in (1) the criteria chosen in step 2, (2) the weights given to the criteria, and (3) the evaluation of alternatives. The influence of personal judgment explains why two car buyers with the same amount of money may look at two totally distinct sets of alternatives or even look at the same alternatives and rate them differently.

Exhibit 4–3 shows only an assessment of the 12 alternatives against the decision criteria; it does not reflect the weighting done in step 3. If one choice had scored 10 on every criterion, obviously you wouldn’t need to consider the weights. Similarly, if all the weights were equal—that is, all the criteria were equally important to you—each alternative would be evaluated merely by summing up the appropriate lines in Exhibit 4–3. For instance, the Ford Fiesta SES would have a score of 38 and the Toyota Camry a score of 43. But if you multiply each alternative assessment against its weight, you get the figures in Exhibit 4–4. For instance, the Kia Soul scored a 40 on durability, which was determined by multiplying the weight given to durability [5] by the manager’s appraisal of the car on this criterion [8]. The sum of these scores represents an evaluation of each alternative against the previously established criteria and weights. Notice that the weighting of the criteria has changed the ranking of alternatives in our example. The Volkswagen Golf GTI, for example, has gone from first to third. Looking at the analysis, both initial price and interior comfort worked against the Volkswagen.