2.0 Decision Scenario

Consider the following scenario. Really Big Ideas, Inc., a small company that develops inventions for the consumer market, has recruited you as a consultant to make a recommendation on a critical business decision. At 10:00 a.m., you meet Adam Smith, the Vice President in charge of product development. Smith expresses his wish for an outside opinion on a decision the company must make soon. Your job is to supply such an informed opinion.

Smith tells you that a short meeting will provide all the information needed and introduce the project managers for two possible (and competing) products. As Smith ushers you into a conference room he also mentions that he expects your analysis by 11:00 a.m., scarcely an hour from now! You are given pen, paper, and a calculator.

At 10:05 a.m., you and Smith enter a small meeting room. Smith explains that Really Big Ideas has a three-month window of opportunity to develop a new product using new pattern recognition software the company recently created. Surprisingly, the software adapts easily to different applications. Really Big Ideas only has the resources and time to develop one of two projects, or to develop none. Project Managers Aisha Ali and Ben Bertrand arrive. After brief introductions, Aisha Ali launches her pitch. She says that a smoke and fire detector is the best product to develop. The detector goes beyond ordinary smoke detectors. It can detect flames as well as smoke. It will cost $100,000 to develop, and if it succeeds the Business Analysis department says it will generate revenue of $1,000,000. Not to be outdone, Ben Bertrand announces that a motion detector device is the best product to develop. The motion detector, which uses conventional household lighting, will cost only $10,000 to develop. He adds that the analysts expect such a device to generate $400,000 in revenue.

Smith asks if you have any questions, so you carefully ask about the chances for success. Both project managers agree that Samiksha Singh, the Director of the Business Analysis department, has that information. Smith initiates a conference call with Samiksha Singh. Singh informs the meeting that the smoke and fire detector has a 50% chance of success, and that the motion detector has an 80% chance of success.

Smith thanks all the participants and ends the meeting. It is now 10:30 a.m. Smith announces that he’ll return within a half hour to see if you have decision analysis.

Smith leaves you with your notes, paper, pen, and a calculator. Can you help Really Big Ideas to decide which product, if either, to develop? How can you evaluate the alternatives in a measurable way given the various uncertainties involved? You can use a decision tree to describe and then to evaluate the decision alternatives.

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