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Resource Allocation and Negotiation Framework for English Furniture Company

This resource allocation model focuses on strategic planning for the English Furniture Company over the next 5 years, considering variables, objectives, strategies, costs, and benefits for each region. It also delves into negotiation problems and efficient frontier analysis to find mutually beneficial deals. The stages in building the model involve identifying variables, assessing strategies, determining weights, proposing packages, and using a computer for analysis.

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Resource Allocation and Negotiation Framework for English Furniture Company

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  1. Resource Allocation and Negotiation Problems

  2. Resource allocation models

  3. Variables are areas to which resources might be directed –e.g. products, projects, regions or departments Apackage is a combination of strategies –containing one strategy for each variable

  4. Stages in building a resource allocation model • Identify variables, resources to be directed and objectives 2. Identify possible strategies available for each variable • For each variable assess costs and benefits of each strategy (continued...

  5. Stages in building a resource allocation model (contd) 4. Assess within-criterion weights so that each benefit can be measured on a common scale 5. Assess across-criteria weights to compare ‘importance’ of different benefits 6. Propose a package that appears to achieve objectives (continued...

  6. Stages in building a resource allocation model (contd) 7.Use a computer to identify costs and benefits of all packages and the efficient frontier 8. Use the computer to find if there are more efficient packages than the proposed package 9. Perform sensitivity analysis

  7. English Furniture Company

  8. Planning strategy for next 5 years • Variables = 4 regions • Resource to be assigned = money • Objectives: 1. Sustain profitability in short term (PROFIT) 2. Increase market share (MKT SHARE) 3. Minimize risk (RISK)

  9. Identifying strategies for each region

  10. Costs and benefits of strategies in individual regions

  11. Comparison of East & West’s scales for market share

  12. Within-criterion weights: Profit

  13. Within-criterion weights: Market share

  14. Within-criterion weights: Risk

  15. Value of strategies with benefits measured on common scale

  16. Across-criteria weights

  17. Identifying the efficient frontier

  18. Investigating costs and benefits in the West region

  19. Investigating costs and benefits in the East region

  20. Investigating costs and benefits in the South region

  21. Negotiation models

  22. Characteristics of negotiation problems • No. of parties: two or more than two? • Monolithic or non-monolithic parties? • No. of issues: one or more than one? • Time constraints? • Final agreement binding? • Third party intervention possible?

  23. We consider negotiations involving -two parties -several issues Objective: To find deals which are beneficial to both parties

  24. Illustrative problem • Management v. Union negotiations • Union demand: * 15% pay rise * 3 extra days’ holiday per year * reinstatement of workers sacked after breach of regulations

  25. Efficient frontier If a deal is on the efficient frontier any improvement for one party can only be achieved at the expense of the other party This is known as Pareto optimality

  26. Values and weights for pay rise

  27. Values and weights for holidays

  28. Values and weights for reinstatement

  29. Value of tentative deal to management and union

  30. Identifying the efficient frontier

  31. Reported advantages of applying decision analysis to negotiations • Creative attitude in negotiations • Negotiators could prepare in advance and anticipate position of other party • Clearer understanding of problem and increased flexibility • Improved communication within negotiation team

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