6.1.4 Modeling Objectives on Cost in a Decision Maker's Value Structure

Abstract

AbstractMulti‐objective decision problems involve trading off conflicting objectives and sacrificing resources (often money) to gain some level of performance or some compliment of attributes from the alternatives. This paper considers whether or not the objective of minimizing cost should be included as part of the fundamental objective hierarchy when modeling a decision maker's value structure. Specifically, it examines two approaches to representing cost (financial resources) in a value structure. In the first, minimizing cost is treated as a fundamental objective that should be included in the value structure. This approach suggests that a single numerical index should be used to rank‐order alternatives. In the second, minimizing cost is treated as an attribute of an alternative that is separate from the value structure. This second approach suggests that an alternative's utility can be plotted against the cost providing a set of utilities and associated costs. This paper explores and reports findings of interest in modeling the objective of minimizing cost.