Calculate the SMART weights for the non-monetary attributes and the aggregate benefit scores for the five agencies on the non-monetary attributes.

Assessment Brief and Requirements

• If for any reason you have issues uploading your assignment to the dedicated submission link on the VLE you must immediately log an enquiry through your Student Portal and attach your assignment to that enquiry.

• This individual coursework is 100% of your overall module mark for AFM080 Analysing Risk for Decision Making.

• This individual coursework is marked out of a total of 100 marks.

Context

There are four (4) questions in this assessment. You must:

• Review the 4 questions in the assessment.

• Answer all questions and question parts.

  • Apply appropriate decision-making methods, techniques, and concepts to answer the questions.

  • Where instructed, you may answer qualitative, non-numeric questions using bullet points, phrases, sentences, or short paragraphs.

• Present your analysis in a simple, efficient, and professional way.

  • Note any word count guidance for qualitative, non-numeric questions.

  • Clearly indicate parts of questions and your answers.

  • Clearly show your calculations, including general formulas used.

  • Clearly state any assumptions, where appropriate where required.

• Submit as follows:

  • Excel spreadsheet with calculations.

  • Each question should be answered on a different sheet within the spreadsheet and renamed accordingly, e.g. Question 1 in sheet 1 renamed ‘Question 1’; Question 2 on sheet 2 renamed ‘Question 2’; etc.

• • Each question part should be clearly indicated.

  • Where possible, please indicate quantitative answers in bold red text within a cell with bold red borders.

  • Qualitative answers should be entered within Excel cells.

Note: The maximum of 100 marks for the submission will be awarded as follows:

• Question 1 [15 marks maximum].

• Question 2 [15 marks maximum].

• Question 3 [15 marks maximum].

• Question 4 [55 marks maximum].

Question 1 (15% of marks available)

A national children`s literacy charity would like to appoint an external agency to design and deliver a public engagement campaign to encourage more families to use local library services. Five agencies have submitted proposals, and the charity must decide between them.

The campaign steering group has identified five attributes that are relevant to its decision:

• campaign team expertise

• community relevance

• digital engagement platform

• volunteer support

• campaign cost

For each of the non-monetary attributes, the steering group has allocated scores to each agency to indicate performance on that attribute, where 0 indicates the worst performance and 100 indicates the best performance.

Agency	Campaign team expertise	Community relevance	Digital engagement platform	Volunteer support	Campaign cost
Larkspur Communications	100	65	80	20	£180,000
Beacon Outreach	75	40	100	0	£145,000
CivicSpark Media	45	100	0	45	£120,000
Meadowfield Partners	0	30	30	100	£155,000
Northbridge Social Impact	35	0	75	85	£105,000

Applying SMART, the steering group considered a hypothetical agency with the worst performance (scores of 0) in all non-monetary attributes. The group then decided which attribute it would most like to improve for the hypothetical agency. The group decided that improving community relevance from the worst score of 0 to the best score of 100 would be the most desirable improvement, providing the most aggregate benefit.

Improvements in campaign team expertise, digital engagement platform, and volunteer support from worst to best performance were then determined to provide 55%, 45%, and 30%, respectively, as much aggregate benefit as the aggregate benefit achieved by improving community relevance from worst to best.

Required

Part A

Calculate the SMART weights for the non-monetary attributes and the aggregate benefit scores for the five agencies on the non-monetary attributes.

[Question 1, Part A: 3 marks]

Part B

Plot the agencies’ aggregate benefit scores and their campaign costs and draw the efficient frontier. Identify the agencies that lie on the efficient frontier.

[Question 1, Part B: 3 marks]

Required

Part A

Plot the utility functions for the average number of customer orders and for annual profit. Interpret the two utility functions with respect to preferences and risk attitude.

[Question 2, Part A: 3 marks]

Part B

Further elicitation sessions with the managers show that the average number of customer orders per day and annual profit are mutually utility independent.

Recall that the utility function for two utility-independent attributes is as follows:

𝑢(𝑥1, 𝑥2) = 𝑘1 ∙ 𝑢(𝑥1) + 𝑘2 ∙ 𝑢(𝑥2) + 𝑘3 ∙ 𝑢(𝑥1) ∙ 𝑢(𝑥2)

where 𝑘₃ = 1 − 𝑘₁ − 𝑘₂

The managers’ elicitation sessions also found the following attribute weights:

𝑘₁ = 0.75

𝑘₂ = 0.45

Attribute 1 is the average number of customer orders per day. Explain how the attribute weights were found.

[Question 2, Part B: 4 marks]

Part C

With reference to your analysis, explain how the managers of the meal-kit company should proceed.

[Question 2, Part C: 3 marks]

Part D

Explain why this recommendation may differ from a recommendation based only on expected annual profit. In your answer, discuss the role of utility functions, risk attitudes, and multiple objectives. The expected word count for this question is 100 words.

[Question 2, Part D: 5 marks]

[Question 2 total: 15 marks]

Question 3 (15% of marks available)

A renewable energy cooperative is deciding between two possible locations for a new battery storage facility. Both locations are viable, but the cooperative has funding and management capacity to develop only one site. The sites being considered are Harbour Exchange, a former logistics site close to an existing electrical substation, and Moorfield Industrial Estate, a more straightforward site on the edge of the town.

A preliminary technical assessment of Harbour Exchange found a 70% probability that the grid connection and site preparation works will be relatively straightforward, which would lead to development costs of £35 million. However, if major grid reinforcement and ground remediation works are required, development costs will rise to £80 million.

The preliminary technical assessment of Moorfield Industrial Estate was much more certain: the site is ready for development, and the battery storage facility is certain to cost £55 million.

The renewable energy cooperative is considering hiring external technical consultants to undertake a more detailed feasibility study of Harbour Exchange. However, the cooperative has found that even the best external consultants use methods that are not perfectly accurate and have an estimated 75% probability of giving the correct indication of whether the Harbour Exchange development will be straightforward or problematic.

Required

Part A

Assuming the renewable energy cooperative wants to minimise expected costs, calculate the expected value of the imperfect information from the external consultants’ detailed feasibility study and state how much the cooperative should pay the external consultants.

[Question 3, Part A: 10 marks]

Part B

Assuming that the external consultants’ detailed feasibility study is perfect and gives a certain indication of whether Harbour Exchange will be straightforward or problematic, calculate the value of the perfect information from the external consultants’ study.

[Question 3, Part B: 5 marks]

[Question 3, Total: 15 marks]

How your work is assessed

Within this assessment you may be assessed on the following aspects, as applicable and appropriate to this assessment, and should thus consider these aspects when fulfilling the requirements of each section:

• The strengths and quality of your overall analysis and evaluation;

• Appropriate use of relevant theoretical models, concepts, and frameworks;

• The rationale and evidence that you provide in support of your arguments;

• The credibility and viability of the evidenced conclusions/recommendations/plans of action you put forward;

• Structure and coherence of your considerations and reports;

• The accuracy of any calculations;

• Appropriate and relevant use of, as and where relevant and appropriate, real world examples, academic materials and referenced sources. Any references should use a consistent referencing system e.g. Harvard, APA, or Vancouver;

• Academic judgement regarding the blend of scope, thrust and communication of ideas, contentions, evidence, knowledge, arguments, conclusions;

• Each assessment requirement(s) has allocated marks/weightings.

According to the Higher Education Qualifications Framework (HEQF) at Masters level (Level 7), the grade standards represented by the mark ranges are:

Mark range	Grade standard
86 - 100	Distinction at very high level
70 - 85	Distinction
60 - 69	Merit
50 - 59	Pass
40 - 49	Fail standard
0 - 39	Bad fail standard

A link to the criteria representing each grade standard may be found here: https://www.ucl.ac.uk/teaching-learning/sites/teaching-learning/files/migrated-files/UCL_Assessment_Criteria_Guide.pdf and you are advised to review the criteria relating to Level 7.