Question
A chemical company is expanding its operations and a disused woollen mill is to be converted into a processing plant.Four companies have submitted designs for
A chemical company is expanding its operations and a disused woollen mill is to be converted into a processing plant.Four companies have submitted designs for the equipment which will be installed in the mill and a choice has to be made among them.The manager of the chemical company has identified three attributes which he considers to be important in the decision:Cost, Environmental Impact, and Reliability.He has assessed how well each design performs on each attribute by allocating values on a scale from 0 (the worst designs) to 100 (the best).These values are shown below, together with the costs which will be incurred if a design is chosen:
in order it is:
Design
Cost ($)
Environmental Impact
Reliability
A(design)
90,000(cost)
20(impact)
100
B
110,000
70
0
C
170,000
100
90
D
60,000
0
50
Eventually, the manager decides to allocate "Environmental Impact" a weight of 30 and "Reliability" a weight of 70.
- Calculate the Aggregate Benefits of each design.
- By plotting the benefits and costs of the designs on a graph, identify the designs which lie on the efficient frontier.
- Without bothering to actually do the math, simply explain how the manager should now decide among the options on the efficient frontier.
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