Amethyst Research
Purchasing Decision Tool
exclusively for VentWorld

Seven Steps to a Stronger Decision

Amethyst Research's Purchasing Decision Tool is (web-based) graphic, interactive, user-friendly software that helps you make the best choice when making large capital equipment purchases. It doesn't make the decision for you but helps you organize your thinking so you consider all of the factors you think are important. Thus, it helps you clearly define criteria for the decision, lets you make the decision more intelligently, and gives you back up for the decision when explaining it to others, particularly for justifying your decision to your purchasing agent and management.

The tool employs a decision model that takes your experience and intuitive thinking and translates them in a logical, graphical way into quantitative measures of relative importance in the decision-making process. Without having to learn complex theories, struggle with intricate and rigid procedures, or work complicated formulas, you organize the myriad of often unrelated considerations that must be accounted for and which are not easily kept straight in your head.

You begin by deciding which product candidates (up to five) you would like to compare.

You can enter up to five factors that you feel will affect your decision. For each factor, you enter up to five subfactors to refine your ideas to develop a "decision tree". Based on our experience and that of our consultants, we have listed a set of default factors and subfactors ("templates") that are important to the purchase of different types of medical equipment. However, you can easily override these defaults and use factors and/or subfactors of your own choosing. We also include expert guidelines and specific methodologies that suggest how the purchaser can collect data that feed into scoring the factors and subfactors.

Next, you weight each factor and subfactor either by entering numerical weighting values or by clicking and dragging a slider on a graph a distance corresponding to the priority you want the factor to have. Your entry is automatically scaled to give the correct relative weight. You then rank the candidate products that you must decide among by entering a number from 0 to 100 for each of them, for each subfactor. Ranking of candidates with respect to cost subfactors is done automatically based on the present value of the money to be spent, calculated from pricing and financial information you provide. Cost information can be entered individually either as a lump sum amount, a specific annual figure (with or without inflation), or a series of custom, annual payments.

Using the weightings and rankings, the software assigns a score to each of the alternatives you must decide among. The alternative that has the highest score is the best choice. The decision tool recalculates the decision results whenever you make a change in any of the input information, and reminds you if you neglect to enter appropriate information or enter it incorrectly. You can easily change the weightings and rankings to examine "what if" scenarios to investigate the influence the various factors and subfactors have on the optimum choice.

The program displays the results, including the weightings and rankings that you input to the program and the calculated scores, on an easy to read table with the best choice identified (rated purely in terms of ranking or as a cost-benefit analysis). It also plots, on a bar graph, the component factor scores for each choice.

IMPORTANT: The Purchasing Decision Tool currently works only with Microsoft Internet Explorer 4 and higher.

Enter the User ID you have selected (or been provided), and then the password. Click the GO! button, or press the Enter key to log in.

On this screen, you may also:

• Request that we send you your password, if you've forgotten it
• Change the information in your user profile

Choose the Decision Template or Model that best suits the decision that you are making. You may:

• Edit one of your own existing Decision Models,
• Create a copy of an expert's template that includes Factors and Subfactors, or
• Create a completely new one

Each decision template has a document that discusses the factors, subfactors, and weightings used. Access this document by clicking on "Click Here", in the Notes section.

On this screen, you also can delete any decision model which you have created.

Factor
A primary decision criterion.
Subfactors
Components of a Factor.
Decision Template
A set of Factors, Subfactors, and their corresponding weights.
Decision Model
A Decision Template that has been filled in, partially or completely, with products and your assessment (ranking) of the products for each Subfactor. For Cost (Subfactors), you will enter contract or estimate prices

Enter the name of the products which you are choosing among (five choices max).

Input the Life Expectancy of each product. This is used when you are entering the cost of ownership and operation for this product.

Review the Factors and Subfactors

If you are working on a Decision Template or a previously saved Decision Model, review the listing of factors and subfactors. You may add, delete or change their names to suit your immediate purposes.

If you created a new Decision Model, use this page to add, delete, or change names of factors and subfactors.

If you delete a Factor, all corresponding Subfactors will be deleted.

Decide how important each factor is to your decision by assigning a relative weight to the Factor (the sum of these weights will equal 100%).

Weight each factor by adjusting the slide bars.

For each Factor, review its Subfactors to assign ranks or set costs for each product. The decision templates offer accompanying documents that suggest how to determine ranks.

The rank of a product indicates how well, on a scale from 0 to 100, the product satisfies a subfactor. For example:

0 = doesn't satisfy
50 = somewhat satisfies
100 = completely satisfies

For each product, place the numeric value in the text field for each Subfactor, or adjust the slider bars to set a rank by multiples of 10.

The product rankings for a given Subfactor do not need to add up to 100.

For Subfactors of Costs, enter payment information and schedules, as directed.

Cost Subfactors require pricing information. Costs are compared on the basis of the present value of money.

There are several ways you can specify payments.

• As a lump sum amount
• As a recurring, annual amount for some specified number of years (up to 30), with or without inflation
• As a series of custom payments that vary from year-to-year

To compute the present value of money, the program uses a default Cash Discount Rate, which you may adjust or eliminate. The Inflation Rate is used to estimate future payments based on quotes given for just this year. If you have questions about either of the numbers, ask the financial person of your organization.

You can change the default values shown and the currency in which costs are expressed by clicking the Change button.

Weight each Subfactor by adjusting the slide bars.

This screen shows you the decision results in graphical form, in particular,

• Benefit-to-cost - the program computes an overall score for the non-cost factors and divides it by a normalized value for costs, based on the present value of money
• Benefits - the program uses the weights and ranks of the non-cost factors and computes an overall score
• Total score - the program uses the weights and ranks, as well as ranks it computes based on product costs, to compute an overall scores

In addition to viewing these results, you can examine the breakdown within each factor, or the rank values you assigned by clicking on the plots. You can also perform 'what if' analyses by adjusting ranks and weights.

The quantitative Results Table can be printed and saved in applications such as Word and Excel, to include in your purchase request.

This page lists your inputs and program calculations in arriving at the best choice.

At any time during the process, you may save your work by choosing the Save Decision button on the bottom of the screen.

You store your work in folders that you create on this page.