Strategic Case for IT Investment

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Learning Objectives
⚫ Describe different types of costs and benefits.
⚫ List and explain the advantages and
disadvantages of different financial models that
used to measure the value of investing an IS
projects.
⚫ Evaluate different alternate models for
understanding the business value of
information systems projects.

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Cost & Benefits
⚫ The worth of a project from financial perspective
essentially involved comparison between the
costs that you spend and the benefits that you
gain thereafter.
⚫ Using the cost/benefit analysis to determine cost
and benefits of an investment.
⚫ 3 steps involved in the cost/benefit analysis:
⚫ Estimate the anticipated
development and operation costs.
⚫ Estimate the anticipated financial
benefits.
⚫ Calculate & compare the detail estimates of
costs and benefits. 3
Cost Categories
⚫ Development costs – the costs that
incurred during development process.
⚫ Operational costs – the costs that incurred after
the IS/outcome put into production.

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Development Costs
– those costs that are incurred during the process
of development
⚫ E.g.:
⚫ Salaries and wages (development team)
⚫ Equipment and installation
⚫ Software and licenses
⚫ Consulting fees and payments to third parties
⚫ Training
⚫ Facilities
⚫ Utilities and tools
⚫ Support staff
⚫ Travel & miscellaneous
⚫ Etc….

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Operational Costs
– Those costs that are incurred after
the IS/outcome is put into
production.
⚫Once the new product is up and running,
normal operating costs are incurred every
year.
⚫ E.g.:
⚫ Connectivity
⚫ Equipment for maintenance
⚫ Costs to upgrade software licenses /software license renewal
fee
⚫ Computer operations
⚫ Programming support (ongoing support)
⚫ Training and ongoing assistance (the help desk)(ongoing
training)
⚫ Supplies
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Benefit Classifications
⚫ Tangible benefits easy to quantify & assigned
a monetary
value.
⚫ Intangible benefits hard to quantify
immediately & hard to assign a monetary value
but may lead to quantifiable gains in the long
run.

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Tangible benefits
Examples of tangible benefits:-
⚫ workforce by automating manual functions
⚫  operating expenses (e.g.  shipping charges for “emergency
shipments”)
⚫  error % (automated editing or validating)
⚫ 🗸Achieving quicker processing & turnaround of documents /
transactions
⚫  bad accounts or bad credit losses
⚫  inventory cost or merchandise losses
⚫  cost of goods through volume discount from bulk
purchase
⚫  paperwork cost
⚫  computer/facilities expenses
⚫ Etc….

2 sources:
-Reduced costs 8
 Intangible benefits
⚫ Benefits that are not easily quantified & hard to assign a
monetary value.
⚫ It includes more efficient customer service or enhanced
decision making.
⚫ Examples of intangible benefits:
Increased levels of service (in way that cannot be measured)
Increased customer satisfaction (not measurable)
Improved company image
Improve resource control
Improve organizational planning

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Traditional Capital Budgeting Model
⚫ Capital Budgeting - Process of analyzing, and
selecting various proposals for capital
expenditures.
⚫ Used to measure the value of long-term
capital investment projects.
⚫ The following capital budgeting models are used to
determine best investment return projects:
⚫ Payback method
⚫ Return on Investment (ROI)
⚫ Net Present Value (NPV)
⚫ Internal Rate of Return (IRR)

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Payback Method
⚫ Measure time required to pay back the initial
investment of a project. (How long it takes to recover
system cost.)
⚫ Time (intersection point) on which cumulative benefit =
cumulative cost.

⚫ Computed as:
(For equal fund flow case)
Original Investment (initial cost)
Number of years to pay back =
Annual Net Cash Inflow (annual return)

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Payback Method Project A:
Project B:
Example Server
ATM installation
consolidation

Investment: $1 Investment: $1
million million
Year Savings
1 $333,333 $250,000
2 $333,333 $250,000
Table 3.1
An
3 $333,333 $250,000
example of
payback
perio
d
4 $250,000

5 $250,000

Total $1 million $1.25 million

Payback period 3 years 4 years
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Payback Method Example: Conclusion
⚫Based on payback analysis, is Project A or Project B
preferable?

Payback analysis -->

Project with shorter payback period (faster return) is preferable.

⚫ Project A payback period= 3 years Shorter

⚫ Project B payback period= 4 years

⚫Conclusion: Project A is
preferable

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Payback Analysis Calculation (usually wont
come out in exam)
For unequal fund flow case,
Example 1-Project A
Project A:
YEAR COSTS CUMULATIV BENEFITS CUMULATIV
E COSTS E
BENEFITS
0 66,000 66,000 3,000 3,000 X
1 11,000 77,000 28,000 31,000 X
2 18,500 95,500 31,000 62,000 X
3 19,200 114,700 34,000 96,000 X
4 21,000 135,700 36,000 132,000 X

5 22,000 157,700 39,000 171,000 √

6 23,300 181,000 42,000 213,000 √

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 Payback Analysis Calculation
• The payback period is approximately 4.2 years

•How you get it?????

Payback period = payback year + cum. cost b4 payback- cum. benefit b4 payback
benefit after payback- cost after payback

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Payback Analysis Calculation
For unequal fund flow case,
Example 1-Project B
Project B:
YEAR COSTS CUMULATIVE BENEFITS CUMULATIVE
COSTS BENEFITS
0 80,000 80,000 - - X

1 40,000 120,000 6,000 6,000 X

2 25,000 145,000 26,000 32,000 X

3 22,000 167,000 54,000 86,000 X

4 24,000 191,000 70,000 156,000 X

5 26,500 217,500 82,000 238,000 √

6 30,000 247,500 92,000 330,000 √

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Payback Analysis Calculation
•The payback period is approximately 4.6 years

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 Payback Method (Cont.)
⚫Advantages:
⚫ Easy to compute and understand.
⚫ Good for high-risk projects in which the useful life of
a project is difficult to determine.
⚫ It matters less how long after year to pay back the
system lasts.

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Payback Method (Cont.)
⚫Disadvantages:
⚫ Ignores time value of money.
For instance, a dollar saved today is worth more to us than
a dollar saved ten years from now, as today’s one dollar
could be drawing interest in a bank for us for ten year
time.
E.g. You have two payment options:
A. Receive $10,000 now
OR
B. Receive $10,000 in three years
Which option would you choose?

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Payback Method (Cont.)
-To illustrate the time value of money, let’s look at the
following timeline:

If you are choosing Option A, your future value will be

$10,000 plus any interest acquired over the three years. The
future value for Option B, on the other hand, would only be
$10,000.

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Payback Method (Cont.)
⚫Disadvantages:
⚫ Does not take into account the overall profitability
of
the project.

 Strictly for short-term investment.

As for long term project, it is more risky because
more changes can take place during the project’s
proposed payback time.

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Return on Investment (ROI)
⚫ The objective of ROI is to calculate a percentage
return based on capital invested, by comparing net
benefits (the return) received from a project to total
initial investment costs of the project.
⚫ Computed as:

Total Benefits – Total Costs – Depreciation

Net Benefit = Useful life

Net Benefits
ROI = X 100 (%)
Total Initial Investment

**Depreciation the decrease in value of assets with the passage of

time,
due in particular to wear and tear. 22
 Return on Investment (ROI) Example
⚫ Example1:Project A (assume 10% depreciation of total costs, project life is 6
yrs)
Year Costs Cumulative Benefits Cumulative
Costs Benefits
Year 0 66,000 66,000 3,000 3,000

Year 1 11,000 77,000 28,000 31,000

Year 2 18,500 95,500 31,000 62,000

Year 3 19,200 114,700 34,000 96,000

Year 4 21,000 135,700 36,000 132,000

Year 5 22,000 157,700 39,000 171,000

Year 6 (213,000
23,300 – 181,000 – 18,100) / 6
181,000 42,000 213,000
ROI = x 100%
63,000
= 3.68%
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Return on Investment (ROI) Example
⚫ Example 1:Project B(assume 10% depreciation of total costs, project life is
6 yrs)
Year Costs Cumulative Benefits Cumulative
Costs Benefits
Year 0 80,000 80,000 - -

Year 1 40,000 120,000 6,000 6,000

Year 2 25,000 145,500 26,000 32,000

Year 3 22,000 167,000 54,000 86,000

Year 4 24,000 191,000 70,000 156,000

Year 5 26,500 217,500 82,000 238,000

Year 6 (330,000
30,000 – 247,500 – 24,750) / 6
247,500 92,000 330,000
ROI = x 100%
80,000
= 12.03%
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ROI Example: Conclusion
⚫Based on ROI analysis, is Project A or Project
B
ROIpreferable?
analysis -->
Project with higher ROI (return rate) is preferable.

⚫ROI of Project = 3.68 %

A = 12.03 % Higher
⚫ROI of Project B
⚫Conclusion: Project B is preferable
--> It has a high ROI rate.

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Return on Investment (Cont.)
⚫ Advantages:
⚫ Can be obtained easily
⚫ Easy to calculate and
understand

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Return on Investment (Cont.)
⚫ Disadvantages:
⚫ Two projects with the same ROI might not be
equally desirable if the benefits of one project occur
significantly earlier than the benefits of the other
project.

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Return on Investment (Cont.)
⚫ Disadvantages:
⚫ Ignore time value of
money.

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Net Present Value (NPV) Analysis
⚫Is a technique of evaluating capital
investment using discounting arithmetic to
determine whether or not they will provide a
satisfactory return.
⚫Computed PVF (present value factor)
as: 1
PV = FV x ( 1+i )n
PV = Present Value
FV = Future Value
i = Discount Rate/interest rate
n = Number of years in the future

NPV = Present value of expected cash flows – initial investment cost

⚫ Discount rate = The interest rate used in NPV analysis to determine the
present
value of future cash 29
Net Present Value (Cont.)
⚫Present value --The current value of one or more
future cash payments, discounted at some
appropriate interest rate, so called discount rate.
⚫For example, the present value of $100 to be
received 10 years from now is about $38.55, using a
discount rate equal to 10%.
⚫How you get it????

PV = 100 x 1
= 38.55
( 1+0.10)10

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Net Present Value (Cont.)
⚫ Thus, the present value of RM1 one year from now at
8% is: -
⚫ PV = 1 * 1 / (1 + 0.08)1 = RM 0.926
⚫ Similarly, the present value of RM10 five years from now
at 12% is: -
⚫ PV = 10 * 1 / (1 + 0.12)5 = RM 5.674

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 Net Present Value (Cont.)
⚫Net present value (NPV) is the amount of money
an investment is worth, taking into account its
cost, earnings and the time value of money.
⚫The formula is:
NPV = PV of expected cash flows – Initial investment cost
or
NPV = total present value of the benefits - total present value of the costs
⚫E.g. If the present value of stream of benefits is RM
3,734,629, and the total present value of costs is RM
1,733,100, giving a net present value of RM
2,001,529.
⚫ In order words, for a RM1.7 million
investment today, the firm will receive net
return more than RM2 million (in today’s 32
 Project A: Project B:
NPV Example ATM installation Server consolidation

Discount Present Present

Year factor Cash flow value of Cash flow value of
(at 10%) cash flow cash flow

0 1.000 -$1 million -$1 million -$1 million -$1 million

1 0.909 +$500,000 +$454,500 +$1 million +$909,000

2 0.826 +$500,000 +$413,000 +$750,000 +$619,500

3 0.751 +$500,000 +$375,500 +$500,000 +$375,500

4 0.683 +$500,000 +$341,500

5 0.621 +$500,000 +$310,500

+$1.5 +$1.25
Total +$895,000 +$904,000
million million

NPV for project A =$895,000

NPV for project B=$904,000
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Net Present Value (Cont.)
⚫In this example, we compare two $1 million
projects with a minimum desired rate of return of
10%.
- On the basis of simple cash flow, the ATM
installation looks better because it generates
$250,000 ($1.5 million -$1.25 million) more over the
life of the investment.
- But when the time value of money is considered,
the server consolidation project looks slightly
better, with an NPV higher by $9,000 ($904,000-
$895,000), because the returns occur earlier in the
project’s life.

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 NPV Example: Conclusion
⚫Based on PV analysis, is Project A or Project
B
PV preferable?
analysis -->
Project with higher NPV (larger return) is preferable.

⚫NPV of Project = RM 895,000

A = RM 904,000 Higher
⚫NPV of Project
B
⚫Conclusion: Project B is preferable
--> It has a higher NPV.

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Net Present Value (Cont.)
⚫Advantages:
⚫ Considers time value of money. It allows consideration
of such things as cost of capital (The required return
necessary to make a capital budgeting project, such as
building a new factory, worthwhile.) , interest rates and
investment opportunity costs (The cost of an alternative
that must be give up in order to pursue a certain action.)
⚫ Considers the earnings over the entire life of
the project.
⚫ Simple criteria for accept or reject a project. It
is especially appropriate for long-term projects.

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Net Present
⚫Disadvantages:
Value (Cont.)
⚫ Sensitivity to discount rates, and that can be tricky to
determine.
⚫ Ranking investments by NPV doesn't compare
absolute levels of investment.
-E.g. this method may be misleading in comparing the
projects of unequal lives. (5 yrs project and 10 years
project involved different levels of risks…)

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Internal Rate of Return (IRR)
⚫ Refer as “Go/No-Go Investment threshold”
⚫ It is the discount (interest) rate that will equate the
present value (PV) of the project’s future cash flows
to the initial cost (I) of the project.
⚫ That is, at IRR, initial cost of the project= present value
of the project’s future cash flow (PV of cash inflow-PV of
cash outflow)
⚫ In other words, IRR is the discount rate that generates a
zero net present value for a series of future cash flows.
at IRR rate, net PV = O
The higher a project's internal rate of return, the
more desirable it is to undertake the project.

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 IRR Example
Discount rate: 10% Discount rate: 15% Discount rate: 20%

Year Cash flow Factor Amount Factor Amount Factor Amount

0 -$1 million 1.000 -$1 million 1.000 -$1 million 1.000 -$1 million

1 +$300,000 0.909 $273,000 0.870 $261,000 0.833 $250,000

2 +$300,000 0.826 $248,000 0.756 $227,000 0.694 $208,000

3 +$300,000 0.751 $225,000 0.658 $197,000 0.579 $174,000

4 +$300,000 0.683 $205,000 0.572 $172,000 0.482 $145,000

5 +$300,000 0.621 $186,000 0.497 $149,000 0.402 $121,000

Total +$500,000 NPV = +$137,000 NPV = +$6,000 NPV = -$102,000

IRR = slightly more than 15%

*****As long as the cost of capital rate (discount rate) is

lower than the internal rate of return (IRR), the project is
acceptable.  produce a positive net PV. 39
Internal Rate of Return (IRR)
⚫In this example, the NPV of the $1 million
project depends on the discount rate, or cost of
capital rate, used to evaluate the worth of the
project
⚫The NPV is zero at the IRR, here a fraction of
a percentage point above 15%.

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Internal Rate of Return (Cont.)
⚫Advantages:
⚫ Considers time value of money.
It's the method favored by many accountants and
finance people.
take into account all those factors like cost of
capital,
interest rate, investment opportunity costs
⚫ Earnings over the entire life of the project are
considered.
All cash flows within the life of the project are
considered.

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Internal Rate of Return (Cont.)
⚫Advantages:
⚫ Effective for comparing projects of different life
periods with different timings of cash in flows.

E.g. √
Project A Project B
Year Cash flow Year Cash flow
0 -$1 million 0 -$1 million
1 +$300,000 1 +$700,000
2 +$300,000 2 +$500,000
3 +$300,000 3 +$100,000
4 +$600,000 4 +$100,000
5 +$100,000
Total +$500,000 Total +$500,000
IRR=12% IRR=13%

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Internal Rate of Return (Cont.)
⚫Disadvantages:
⚫ This method is tedious and difficult to calculate.
(Even Excel uses approximations  answer is not as
100% true/accurate)
E.g. excel (IRR) =28.75%
specific IRR calculator (IRR)= 28.649282902479%
⚫ This method is based on top of the assumption
that the earnings are reinvested at the IRR rate
which is not always true.

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 Limitations of Financial Models
⚫ Cost and Benefits factoring does not account for the risks in
assessing the final outcome.
⚫ It tends to overlook or ignore the social and organizational
dimensions of information systems that may affect the true
costs and benefits of the investment.
⚫ E.g. -Too focus on tangible cost until ignore intangible cost.
(Many companies’ information systems investment decision do
not adequately consider costs from organizational disruptions
created by a new system, such as the cost to train end users &
customer turnover cost as can’t carry on business as usual during
system development
-overlooked on certain tangible benefit area. (too optimistic on
estimating overall anticipated net return)

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Limitations of Financial Model
⚫ E.g.
-do not consider the impact that users’ learning curves for a
new system have on productivity
-do not consider time needed to convert from the use of old
system to new system (not consider the time managers
need to spend overseeing the new system related changes)
-Technology changes rapidly –especially during the course
of the project, causing cost estimates vary greatly.
- overlooked on certain intangible benefit area
-cost and benefits do not occur in the same time frame

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Other Methods of Evaluation
⚫ 2 alternative methods (Non financial and strategic
considerations) to evaluate the worth of the IS
investment:
⚫ Portfolio Analysis
⚫ Scoring Model

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 A) Portfolio Analysis
⚫ A measure of comparing and evaluating a certain
profile of risk and benefit to the firm.

Project Risk

High Low
Potential
Cautiously Examine Identify and Develop
Benefits to High
organization Low Avoid Routine
Projects

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Portfolio Analysis
⚫ Each information system project carries its own set of
risks and benefits.
⚫ Use Portfolio Analysis  examine portfolio of projects
in terms of potential benefits and likely risks.
⚫ Information intensive industries should have a few
high-risk, high-benefit projects to ensure that they
are staying current with technology.
⚫ Organizations in non-information intensive should
concentrate on high-benefit, low-risk projects.

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Portfolio Analysis
Under portfolio analysis,
⚫ High Benefit, Low Risk systems should be identify
& develop.
⚫ High Benefit, High Risk systems should be
examined.
⚫ Low Benefit, High Risk systems should be avoided
⚫ Low Benefit, Low Risk systems should be reevaluated
for possible changes in order to make them a high
benefit systems.

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Portfolio Analysis Exercise:
Manor Way Tools
Manor Way Tools began life as a small steel company at
year 1998. It was one of the first companies to put
carbon into regular iron to create steel. It was strong
and
flexible. Their first products were fish hooks which
were made from the flexible wire that they were able to
produce.
Over the years the product portfolio grew to include
anything that their operation could turn its hand to
such as javelins and railings. Today they focus their
operations on the manufacture of tools for the
professional, production, and the enthusiastic amateur.
Core products include handsaws, drill bits, screwdriver,
bow saws etc
The tool trade is very complex and competitive. Manor
Way's main competitor is Oliver Tools. They are the
market leader in many similar areas of the market. 50
 Portfolio Analysis Exercise:
Oliver is the market leader in handsaws with 70% of the market.
Manor Way has only 10%. As Manor Way are just new to the field of
producing handsaw and because of the budget constraints, they are
still manually producing the handsaw and therefore the numbers
of handsaws produced per day is rather limited. Handsaws usage in
house building are reducing from time to time and nowadays many
amateurs use power tools. However it is still quite profitable.

Manor way still make a range of barbed fish hooks which are
now banned in some markets. Nevertheless, the profit earned
from selling such barbed fish hooks is little compare to other
products and the monthly sales is not stable as well.

Both Oliver and Manor Way have invested heavily in gardening tools
and expect sales to increase in the future since people have more
leisure time and a larger disposable income. The profit earning
from selling such gardening tools is high and attractive. Manor Way
has 10% of the new market, and Oliver has 15%.

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 Portfolio Analysis Exercise:
Manor Way has a high share in the new market for sandpaper
replacement products. Their Wayplate is a popular steel
sandpaper replacement for which they have sole rights. They
have 25% of this growing market. Profit earning from selling
Wayplate is not as high as selling gardening tools but still
been highly observed and recommended by the Manor Way
management for its anticipated bright future sales.

Manor Way has a low market share in the existing market

of screwdriver, with 5% share currently. Profit earning from
selling such screwdriver is averaged compared to other
products that offered by the Manor Way. The screwdriver
production process is not as complicated as any other
essential professional tools for the production and the
enthusiastic amateur and therefore has a low consume of
labour workforce. Manor Way's main competitor in this
screwdriver market is Oliver Tools.

Perform portfolio analysis on Manor Way Tools. 52

 Solution:
Project
Risk
High Low
Handsaw Gardenin
High g tools
Potential Wayplate
Benefits to
organization Barbed fish Screwdrive
Low hooks r

Portfolio Analysis for Manor Way Tools

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Portfolio Analysis Example:

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Scoring Models (popular question)
⚫Quick Method for deciding among alternative
systems based on a system of ratings for
selected objectives (criteria).
⚫It gives alternative systems a single score
based on the extent to which they meet
selected objectives (criteria).
⚫It helps to bring about agreement among
participants concerning the rank of the
criteria.
⚫Scoring model consists of criteria, weights
and scale.

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 Scoring Models
⚫ Criteria - the result of lengthy discussion among the decision-making
group.
 “factor” , “issue” to take into account when decide the worthiness
of
a project/investment.

⚫ Examples of Criteria for scoring models:-

⚫ User Needs Met
⚫ Cost of Initial Purchase
⚫ Reliability
⚫ Ease of Maintenance
⚫ Chances of Success

⚫ Weights – the value, importance or influence that someone or

something has that decision makers attach to the decision criterion.

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 Scoring Models
⚫ Scale – Usually, use 1-to-5 scale/score (lowest to highest) to express the
judgments of participants on the relative merits of each system
(criteria/objective).
 A range of value for measuring /grading purpose.
E.g. 1-10(worst-best)
Scale Meaning
3 Fully satisfies
2 Substantially satisfies
1 Partly satisfies
0 Does not satisfy

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Scoring Model
⚫ Steps in setting up a scoring model:
1. Identify criteria important to the project selection process.
2. Assign weights to each criterion.
3. Assign scales to each criterion for each project.
4. Multiply the scales by the weights to get the total weighted
scores.
Under scoring model, criteria are weighted and assigned score accordingly,
the final score will determine the likely choice for the new system.

58
 Scoring model example:
Criterion Weight score AS/400 score UNIX score Window
(weighte (weighte s XP
d d (weighte
score) score) d
score)
Percentage of user 0.40 2 0.8 3 1.2 4 1.6
needs met

Cost Effectiveness 0.20 1 0.2 3 0.6 4 0.8

of initial purchase

Financing Support 0.10 1 0.1 3 0.3 4 0.4

Ease of 0.10 2 0.2 3 0.3 4 0.4
maintenance

Chances of 0.20 3 0.6 4 0.8 4 0.8

success

Final score 1.9 3.2 4.0

Scale: 1=low 5=high

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Scoring Model: In-Class Exercise
Evaluating ERP Systems with a Scoring Model
⚫ Your company, Audio Direct, sells parts used in audio
systems
for cars and trucks and is growing very fast.
⚫ Your management team has decided that the firm can
speed up product delivery to customers and lower inventory
and customer support costs by installing an enterprise
resource planning (ERP) system.
⚫ Two enterprise software vendors have responded to your
request for proposal (RFP) and have submitted reports
showing which of your detailed list of requirements can
be supported by their systems.
⚫ Audio Direct attaches the most importance to capabilities
for sales order processing, inventory management, and
warehousing. The information systems staff prepared the
following matrix comparing the vendors’ capabilities for these
functions. It shows the percentage of requirements for each
function that each alter native ERP system can provide. It also
attaches
shows theto weight,
each of or
these
relative importance, the company 60
Scoring Model: In-Class Exercise

⚫ Calculate each ERP vendor’s score by

multiplying the percentage of requirements
for each function by the weight for that
function.
⚫ Calculate each ERP vendor’s total score for
each of the three major functions (order
processing, inventory management, and
warehousing). Then calculate the grand total
for each vendor.
⚫ On the basis of vendor scores, which ERP
vendor would you select?
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 Scale range : 0 – 5 ; 0---do not satisfy, 5---fully satisfy
ERP System A ERP System B
ERP System A ERP System B
Function Weight Weighted Weighted
%(scale) % (scale)
Score Score

1.0 Order Processing

1.1 On-line order entry 4 2 3
1.2 On-line pricing 4 3 4
1.3 Inventory check 4 1 5
1.4 Customer credit check 3 4 1
1.5 Invoicing 4 5 2
Total Order Processing
2.0 Inventory Management
2.1 Production forecasting 3 3 2
2.2 Production planning 4 4 1
2.3 Inventory control 4 2 3
2.4 Reports 3 1 4

Total Inventory Management

3.0 Warehousing
3.1 Receiving 2 3 3
3.2 Picking/packing 3 2 2
3.3 Shipping 4 1 2
Total Warehousing
Grand Total 62
Scoring Model: In-Class Exercise
1. You are think about a new computer for your own needs
(general, gaming, desktop replacement, travel)
2. Evaluate 4 possible proposed solutions for your personal
needs
3. Go to Dell web site OR any other website
(e.g. http://computers.toptenreviews.com ,
http://www.pcmag.com )
4. Select 10 most important computer specs =
criteria for you
5. Assign numeric weights for each designated
criterion
6. Assign numeric scores (range 1 – 10) to each criterion for
each option/alternative
7. Calculate totals by multiplying the scores by the weights
and get the total weighted scores 63
Solution

64