S556 SYSTEMS ANALYSIS & DESIGN

Week 12

Selecting Alternatives

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Provide clients with some alternatives: Long-term vs. short-term

Expensive vs. inexpensive

Cost-Benefit Analysis

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1. Identify the problem clearly 2. Explicitly define the set of objectives

to be accomplished 3. Generate alternatives that satisfy the

stated objectives 4. Identify clearly the constraints (e.g.,

technological, political, legal, social, financial

Cost-Benefit Analysis

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5. Determine and list the benefits and costs associated with each alternative

6. Calculate the benefit/cost ratios and other indicators (e.g., present value, payback period) for each alternatives

7. Prepare the final report, comparing the results

Cost-Benefit Analysis

Title Budget (Million)

Domestic BO (M)

World BO (M)

The Lord of the Rings: The fellowship of the ring

$109 $313.8 $860.7

The Two Towers $94 $340.5 $920.5

The Return of the king

$94 $377 $1129.2

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http://www.the-movie-times.com/thrsdir/alltime.mv?domestic+ByDG

Cost-Benefit Analysis

Title Budget (Million)

Domestic BO (M)

World BO (M)

The Lord of the Rings: The fellowship of the ring

$109 $313.8 $860.7

The Two Towers $94 $340.5 $920.5

The Return of the king

$94 $377 $1129.2

X-Men: First Class $160 $146.4 $352.6SLIS S556

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http://www.the-movie-times.com/thrsdir/alltime.mv?domestic+ByDG

Shortcomings of the B/C Methodology

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Doesn’t identify the scale of the projects (ratio only)

Do not assess unquantifiable items in financial terms

Introduce biases in the approaches to a problem

Cost-Effectiveness

Effectiveness: Value Worth Benefit Utility Gain Performance

Establish criteria & use weight (see Shtub, et al., 1994, Figure 3-3)

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Selecting Alternatives (Satzinger, et al., 2009)

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Identifying criteria: General requirements (Fig. 8-7, p. 308) Functional requirements (Fig. 8-8, p. 309) Technical requirements (Fig. 8-9, p. 310)

Risk-payoff Analysis (Yen & Davis, 1999)

Area 3: advance immediately

Area 4: do nothing until resources or the expected payoff increases

Area 1: wait until additional analysis reduces the risk

Area 2: stop immediately

10

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payoffs

risks

Area 1high payoffhigh risk

Area 3high payofflow risk

Area 2low payoffhigh risk

Area 4low payofflow risk

Risk-Benefit Analysis (Shtub, et al., 1994, p. 134)

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Formulations Problem (or risk) definition Value system design System synthesis

Analysis Forecast failures Optimization and refinement of alternatives

Interpretation Decision making Planning for action Implementation

Analyzing Forces

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Force Field Analysis: Is a method used to get a whole view of all

the forces for or against a plan, so that Helps decision making which takes into

account all interests. Is a specialized method of weighing pros

and cons Where a plan has been decided on,

FFA allows you to look at all the forces for or against the plan.

It helps you to plan or reduce the impact of the opposing forces, and strengthen and reinforce the supporting forces.

Analyzing Forces

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List all forces for change in one column, and all forces against change in another column.

Assign a score to each force, from 1 (weak) to 5 (strong).

Draw a diagram showing the forces for and against, and the size of the forces

Analyzing Forces

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Adjusting Forces

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By training staff (increase cost by 1) fear of technology could be eliminated (reduce fear by 2)

It would be useful to show staff that change is necessary for business survival (new force in favor, +2)

Staff could be shown that the new machines will introduce variety and interest to their jobs (new force, +1)

Wages could be raised to reflect new productivity (cost +1, loss of overtime -2)

Slightly different machines with filters to eliminate pollution could be installed (environmental impact -1)

These changes swing the balance from 11:10 (against the plan), to 8:13 (in favor of the plan)