Maximizing Effectiveness and Net Benefits in Decision Making
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Added on 2019-09-21
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This article discusses the different criteria for decision making and how to determine the best course of action. It also covers how to estimate the value of time and cost of gasoline. The article provides insights on how to maximize effectiveness and net benefits in decision making.
Maximizing Effectiveness and Net Benefits in Decision Making
Added on 2019-09-21
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1. Determine the following before deciding a prescription: (a) maximize effectiveness at the least cost; (b) maximize effectiveness at a fixed cost of $10,000; (c) achieve a fixed-effectiveness level of 6,000 units of service at a fixed cost of $20,000; (d) maximize net benefits, assuming that each unit of service has a market price of $10; (e) maximize the ration of benefits to costs, assuming that each unit of service has a market price of $10.Answer: The application of adequacy method will be beneficial at this point. A predetermined effectiveness level supports the specific standard and the extent of the same conforms to adequacy. The criterion that relates to the adequacy is about the anticipations of the strength among the options concerning policy and values of the expected outcomes (Dunn, 2012). Mentioned below are the various determinations:a) Maximize effectiveness at the least refers to the Type II problem.b) Maximize effectiveness at a fixed cost of $10,000 refers to the Type I problem.c) Achieve a fixed-effectiveness level of 6000 units of service at a fixed cost of $20,000 refers tothe Type II problem.d) Maximize net benefits, assuming that each unit of service has a market price of $10 refers to the Type I problem.e) Maximize the ration of benefits to costs assuming that each unit of service has a market price of $10 refers to the Type III problem.2. Determine which of the two main programs (Program I and Program II) should be selected under each of these criteria. Justify your position.Answer: The complex relationship between the cost and effectiveness can be witnessed while considering these four problems. Therefore, it is advisable that the relationship among these two elements, namely, costs and effectiveness should be taken into consideration rather than viewing both the elements separately (Dunn, 2012). Mentioned below are the details:a) Maximize effectiveness at the least should be preferred considering Program I. The reason behind the same is that the program displays equal-effectiveness. If the cost and effectiveness areobserved it can be stated that both are not varying freely. Moreover, at the balance point, the ratio among the effectiveness and the cost is lowest. b) Maximize effectiveness at a fixed cost of $10,000 should be preferred considering Program II.The reason behind the same is that it can be observed achieving high level of effectiveness and simultaneously remains under the limitation of the fixed cost. c) Achieve a fixed-effectiveness level of 6000 units of services at a fixed cost of $20,000 should be preferred considering the Program II. The reason behind the same is that the ratio of the effectiveness to the cost will be observed to be greatest at the interaction point.
d) Maximize net benefits, assuming that each of service has a market price of $10 should be preferred considering the Program II. The reason behind the same is that it can be witnessed to be achieving high level of effectiveness while staying under the fixed cost limitation. e) Maximize the ration of benefts to costs assuming that each unit of service has a market price of $10 should be preferred considering the Program I. The reason behind the same is that the program displays equal-effectiveness. The variation among cost and effectiveness is not free. Moreover, the ratio among the two is lowest at the balance point. 3. Describe the conditions under which each criterion may be an adequate measure of the achievement of objectives.Answer: Prior to describing the conditions under which each criterion may be an adequate measure of the achievement of the objectives, it is advisable that the basic objectives of decision issues must be considered that is about understanding the reason behind the interest of decision maker in certain decision. It can be stated that listing down the complete basic objectives for the decision is a tedious activity. Therefore, it consumes time, mental energy, and requires some appreciation. The criteria related to policy prescription provides various suggestive measures thatcan be used as help in completing the task properly and providing measures that can be used in appraising the basic objectives’ qualities. To conduct the analysis of the various options as per the objectives, attribute is required for the measurement of the objectives. Proper attributes aids in the appreciable analysis.For decision situations, one can witness particular time when it gets considered. Prior to that timeperiod, no awareness exists for the decision. The categorization of the decision situations can be done based on the way elevation to consciousness was done. Some of them are caused by the external incidences and factors, which is stated as triggers which state that the decisions need to be made. Triggers come from various situations or incidents that are not the part of the decision maker. Therefore, such decision situations can be referred as the decision problems. One of the other ways that the decision maker realizes the need of the decision is when he or she thinks that some control is necessary on the situation. This can be referred as the internal trigger or factor. The consideration that a decision is needed to be made is the first step towards decision making. Some examples are: Can the agency maximize effectiveness at a fixed cost of $10,000? What is the right method to improve the agency effectiveness? And so on.4. Determine the assumptions that govern estimates of the value of time lost driving, indicating which assumptions (if any) are more tenable than others. Justify your position.Answer: Walk time, wait time and in-vehicle travel time are the various aspects of the travel time savings. Travel time refers to the cost incurred by the users and the value related to this is concerned with the benefits that have been derived from the same by the traveller. If the travel time reduces then the saved time will be converted into extra time that will be available for the individual to leisure or work. The service should be reliable which directly relates to the transit
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