A cost-benefit decision model: analysis, comparison amd selection of data management

Abstract

This paper describes a general cost-benefit decision model that is applicable to the evaluation, comparison, and selection of alternative products with a multiplicity of features, such as complex computer systems. The application of this model is explained and illustrated using the selection of data management systems as an example. The model has the following features: (1) it is mathematically based on an extended continuous logic and a theory of complex criteria; (2) the decision-making procedure is very general yet systematic, well-structured, and quantitative; (3) the technique is based on a comprehensive cost analysis and an elaborate analysis of benefits expressed in terms of the decision maker's preferences. The decision methodology, when applied to the problem of selecting a data management system, takes into consideration the life cycle of a DMS and the objectives and goals for the new systems under evaluation. It allows the cost and preference analyses to be carried out separately using two different models. The model for preference analysis makes use of comprehensive performance (or preference) parameters and allows what we call a “logic scoring of preferences” using continuous values between zero and one, to express the degree with which candidate systems satisfy stated requirements. It aggregates preference parameters based on their relative weights and logical relationships to compute a global performance (preference) score for each system. The cost model incorporates an aggregation of costs which may be estimated over different time horizons and discounted at appropriate discount rates. A procedure to establish an overall ranking of alternative systems based on their global preference scores and global costs is also discussed.

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