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Decision Making with Multiattribute Performance Targets: The Impact of Changes in Performance and Target Distributions

Author

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  • Ilia Tsetlin

    (INSEAD, 1 Ayer Rajah Avenue, Singapore 138676)

  • Robert L. Winkler

    (Fuqua School of Business, Duke University, Durham, North Carolina 27708-0120)

Abstract

In many situations, performance on several attributes is important. Moreover, a decision maker’s utility may depend not on the absolute level of performance on each attribute, but rather on whether that level of performance meets a target, in which case the decision maker is said to be target oriented. For example, typical attributes in new product development include cost, quality, and features, and the corresponding targets might be the best performance on these attributes by competing products. Targets and performance levels typically are uncertain and often are dependent. We develop a model that allows for uncertain dependent targets and uncertain dependent performance levels, and we study implications for decision making in this general multiattribute target-oriented setting. We consider the impact on expected utility of modifying key characteristics of performance (or target) distributions: location, spread, and degree of dependence. In particular, we show that explicit consideration of dependence is important, and we establish when increasing or decreasing dependence is beneficial. We illustrate the results numerically with a normal model and discuss some extensions and implications.

Suggested Citation

  • Ilia Tsetlin & Robert L. Winkler, 2007. "Decision Making with Multiattribute Performance Targets: The Impact of Changes in Performance and Target Distributions," Operations Research, INFORMS, vol. 55(2), pages 226-233, April.
    • Handle: RePEc:inm:oropre:v:55:y:2007:i:2:p:226-233
    DOI: 10.1287/opre.1060.0343
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    Cited by:

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    7. Sean D. Vermillion & Richard J. Malak, 2020. "An investigation on requirement and objective allocation strategies using a principal–agent model," Systems Engineering, John Wiley & Sons, vol. 23(1), pages 100-117, January.
    8. Hong-Bin Yan & Van-Nam Huynh & Yoshiteru Nakamori, 2012. "A group nonadditive multiattribute consumer-oriented Kansei evaluation model with an application to traditional crafts," Annals of Operations Research, Springer, vol. 195(1), pages 325-354, May.
    9. Jeffrey M. Keisler & Robert F. Bordley, 2015. "Project Management Decisions with Uncertain Targets," Decision Analysis, INFORMS, vol. 12(1), pages 15-28, March.
    10. Xinwei Zhang & Qiong Feng & Shurong Tong & Hakki Eres, 2022. "Multilinear target-based decision analysis with hybrid-information targets and performance levels," Fuzzy Optimization and Decision Making, Springer, vol. 21(4), pages 605-647, December.
    11. Kou, Gang & Ergu, Daji & Shang, Jennifer, 2014. "Enhancing data consistency in decision matrix: Adapting Hadamard model to mitigate judgment contradiction," European Journal of Operational Research, Elsevier, vol. 236(1), pages 261-271.
    12. Song, Yongming & Li, Guangxu & Li, Tie & Li, Yanhong, 2021. "A purchase decision support model considering consumer personalization about aspirations and risk attitudes," Journal of Retailing and Consumer Services, Elsevier, vol. 63(C).
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