PHASE I

Decision Statement

My parents have always been very generous to me. This was especially
true when I graduated high school in 2002. I was going away to college and
needed a newer and more reliable car than what I already had. They bought me
a 1997 Sunfire GT. It was such a sporty, cute car for a girl. It was red and had
all the luxuries I could want. However, a few years later those luxuries started to
fail. By the time I graduated from the University of Georgia in 2005, I had
replaced the engine, had no air conditioning, and my passenger window did not
work. This was very inconvenient during the summer months when the
temperature outside gets around 100 degrees.
When I started my job at Moore, Ingram, Johnson, and Steele, LLP after
graduation, I thought this would be my chance to buy a new car that would last a
lot longer than my other two cars. I was making a decent and stable salary and
was also considered a timekeeper for the firm. This meant my time was billed to
the clients allowing me more money every month. After I began my new job, I
realized that I wanted to go back to school to get another degree. Since I already
have a degree, my HOPE Scholarship has been exhausted. Therefore, tuition
and fees would come out of my pocket. This would put a dent in the amount I
would be able to spend on a car. What is the best way for me to buy a car and it
not effect my ability to pay for school? Comment [jld1]: Good Problem
Statement

Concerns

1. Cost of new car

2. Cost of used car
3. Maintenance cost of the car repairs
4. Paying for school each semester
5. Amount of down payment needed for the car
6. Using of my savings account to pay for the car or school
7. Billing hours at work
8. Luxuries on the car that are needed
9. Insurance costs and having a good policy
10. Financing rates for a car loan
 Succinct Objectives

1. Affordability
2. Durability
3. Maximum luxuries
4. Warranty
5. Insurance discounts
6. Shopping for rates

Luxuries – Musts

1. Automatic transmission
2. Power everything – locks, windows, steering, etc.
3. Air conditioning
4. CD Player and Radio
5. V6 engine

Luxuries – Wants

1. Sun roof
2. Leather seats
3. Car alarm
4. Convertible top
5. Alloy wheels

Means and Ends

1. Affordability
• Why? – Do not want to use savings account for car payments
• Why? – Want to use checking account to make car payments
• Why? – Do not want to effect school money that I have in my
savings account
• Why? – I do not want to have 2 loan payments a month
• Why? – I want to minimize my monthly spending as much as I can

2. Durability
• Why? – Want this car to have minimal maintenance as possible
• Why? – Want car to last more than a few years
• Why? – Do not want to be buying another car before I am done with
school
• Why? – To minimize cost
3. Luxuries
• Why? – Want to maximize luxuries on the car
• Why? – Want to be comfortable driving the car
• Why? – I am going to be driving the car for awhile
• Why? – I want a durable car that is enjoyable and comfortable for
me and my passengers?
• Why? – Want my car to look nice because I may have clients riding
in my car at some point in time

4. Warranty
• Why? – Want a warranty on the car
• Why? – To cut costs of maintenance
• Why? – Want to maintain my luxuries as long as possible
• Why? – Drive the car as long as I can
• Why? – Do not want to put a lot of money in my car when it could
be going elsewhere, I.E. school

5. Insurance
• Why? – Want to maximize discounts available to me
• Why? – Want to get the best policy for the lowest rate
• Why? – Need affordable coverage
• Why? – Because I am paying for school

6. Rates
• Why? – Want to shop for financing rates
• Why? – Do not want to settle for first thing I find
• Why? – Want to get lowest rate
• Why? – Lowest possible monthly loan payment
• Why? – Do not want to spend a majority of my monthly income on a
car

Fundamental Objectives Clarification

• Need affordable car to minimize my monthly spending and can be paid out
of my checking account – can spend no more than $250.00 per month for
car payment Comment [jld2]: Good definition of
objective
• Want to save money and not sink all of my money into a car payment.
• The car should not affect my ability to pay for school or cut into my
savings account.
• Need a car that will last several years because I need a reliable car for
school and work.
• Want a car with all the luxuries I find necessary because I want myself and
any passengers to be comfortable riding in my car.
• Luxuries are also needed because I want a nice looking car.
• A warranty will help if any major problem occurs.
• Need to shop around for insurance to get the rest rate and the best
coverage.
• Utilize discounts, so I need to make good grades to keep up a 10%
discount – If I make a certain grade point average, then I get a discount on
my insurance policy
• Do not go for the first financing rate that I find because it might not be the
best deal, so I need to do research for shop and compare.

Demonstration

• I did an Internet search of dealerships to price new and used cars for the
models that I have been looking at to see who has the best deals and
specials.
• I asked my father about the durability and maintenance of the models that
I have been looking at. He is a claims adjuster for a major insurance
company. Therefore, he knows which cars are built to last and require
little maintenance.
• I made a list of all the luxuries my car needed to have in order for me to
buy it. I also made a list of what I could live without, but if it came on the
car, it would be nice to have.
• The warranties will have to be investigated later, as I begin to look more in
depth at a certain vehicle and what the dealership is offering on those
vehicles.
• I did an Internet search of 3 major insurance companies to see who would
give me the best rate and best policy. I also talked to my father about this
regarding his company that he works for.
• I did an Internet search, as well as, a walk-in search for vehicle loan rates
at local banks and credit unions.

Modifications

• I found that I could afford a new car than what I expected I could afford
– I could afford up to $300.00 per month for the car payment.
• There is some 0% financing available at some dealerships right now,
so that would help lower my monthly payments.
• I also found that my insurance would be lower than expected because
of other discounts available to me.
 PHASE II

Alternatives

1. Buy a new car

a. Good chance of warranty
b. No previous owners
c. Possibility of 0% financing
d. Greater chance of having my must luxuries
2. Buy a used car
a. More affordable monthly payments
b. Easier to save money at the same time
c. Good chance of having my must luxuries
d. Still better than my current car
3. Do not buy a car at all
a. Will not have a car payment
b. Save more money for school
c. Save more money for a better car in the future
d. Wait to see if I get another car for graduation
4. Wait until my last semester to buy a car
a. School will all be paid for
b. Have more money to spend
c. Warmer weather, so I will want to have air conditioning
d. Could use graduation money for a down payment
5. Get my grandmother’s new rich husband to buy me a car
a. I will not have to spend my own money for a car
b. I will still be able to pay for school with no problems
c. I will have a new car with the luxuries that I am missing now
d. I will have the ability to save my money for other things
6. Win the lottery
a. Money will no longer be a factor at all
b. I could buy any car that I wanted
c. Paying for school will also not be a problem
d. I will not be held back from anything else because I will be rich
7. Fix all of the problems on my car instead of buying a car at all
a. I will have air conditioning again
b. It would be cheaper than buying a car
c. Work done will have a guarantee if something breaks
d. I will be able to keep the car I have now
 Fundamental Objectives

1. Affordable car – MUST Comment [jld3]: Need definition

here about what is affordable.
a. Need to be able to make payments each month from only using my
checking account
2. Save money - MUST Comment [jld4]: How much
money? $1 / month; $100 / month?
a. I need to not spend all of my monthly income because I need to keep
saving money too.
3. School payment will not be effected – MUST Comment [jld5]: Isn’t this almost
the same thing as #2 above? How
a. Buying a car should not prevent me from paying for school much money do you need to reserve
4. Durability – MUST for this?
a. The car should last more than 5 years without any major problems or Comment [jld6]: How will you
measure durability?
malfunctions
5. Luxuries – MUST
a. Must have an automatic transmission, power everything, air
conditioning, CD player and radio, and a V6 engine
6. Luxuries – WANT
a. Want to have, but it is okay if it does not have a sun roof, leather seats,
a car alarm, a convertible top, and alloy wheels
7. Warranty – WANT
a. Would like to have a warranty on the car I am purchasing, but it is okay
if the car does not have one
8. Financing rate – WANT Comment [jld7]: What would this
be?
a. Want to have the best financing rate I can get, if I do go ahead and buy
a car before graduation
9. Length of car loan – WANT
a. Want a car loan that is 5 years long, but it is okay if I get one that is 4
years long

MY COMMENTS
Consequence shows 4 alternatives, but you originally had 7 alternatives.
How did you reduce these? Which ones were eliminated and why?

No discussion about how you used the must criteria to eliminate any
alternatives

Must objectives should not be used in Trade-off Matrix and Alternatives

that did not meet must criteria should be eliminated.

What is the difference between Trade-Offs and Trade-Offs2? This is

confusing and there should only be one Trade-Offs table.

Risk Profile & Desirability Matrix look good, but may need to be redone
after the Trade-off Matrix is redone (after removing the must criteria and
rescoring the Importance Scores for the want criteria).
 Points Awarded
Memo 5 0
Phase One: Decision Statement & Objectives 9 9
Phase Two: Alternatives 9 7
Phase Three: Consequence Matrix 9 4.5
Phase Four: Trade-off Matrix 9 4.5
Phase Five:
ƒ Risk Profile 4.5 4
ƒ Risk Desirability Matrix 4.5 4

Total 50 33

33/50 = 66%
 Consequence Matrix

Consequence Matrix

Buy New Car Buy Used Car No Car Wait

Affordable Car - MUST $30,000.00 $20,000.00 $0.00 $30,000.00

Save Money - MUST Greatly Effected Moderately Effected Not Effected at All Not Effected at All
School Payment Not Effected -
MUST Greatly Effected Moderately Effected Not Effected at All Not Effected at All

Durability - MUST Greatest Moderate Questionable Not Applicable Now

MUST Luxuries Yes Yes No Yes

WANT Luxuries Possible Possible No Possible

Warranty - WANT Greatly Possible Likely Possible None Likely Possible

Financing Rate - WANT Moderate Moderate None Not Applicable Now

Length of Car Loan - WANT 5 years 5 years None 5 years

 Trade-Offs

Trade-Offs
Importance Score Buy New Car Buy Used Car No Car Wait
Affordable Car 25 8 (2.0) 8 (2.0) 10 (2.5) 9 (2.25)
Save Money 20 5 (1.0) 6 (1.2) 10 (2.0) 9 (1.8)
School Payment Not Effected 25 5 (1.25) 6 (1.5) 10 (2.5) 10 (2.5)
Durability 15 10 (1.5) 9 (1.35) 5 (0.75) 5 (0.75)
Must Luxuries 10 10 (1.0) 10 (1.0) 5 (0.5) 5 (0.5)
Want Luxuries 1 10 (0.1) 9 (0.09) 5 (0.05) 9 (0.09)
Warranty 1 10 (0.1) 9 (0.09) 5 (0.05) 5 (0.05)
Financing Rate 2 5 (0.1) 5 (0.1) 10 (0.2) 5 (0.1)
Length of Car Loan 1 5 (0.05) 5 (0.05) 10 (0.1) 5 (0.05)
Total: 100 Average: 7.1 Average: 7.38 Average: 8.65 Average: 8.09

Trade-Offs II
Importance Score Buy New Car Buy Used Car No Car Wait
Affordable Car 25 5 (1.25) 8 (2.0) 10 (2.5) 9 (2.25)
Save Money 20 5 (1.0) 5 (1.0) 10 (2.0) 9 (1.8)
School Payment Not Effected 25 3 (0.75) 6 (1.5) 10 (2.5) 10 (2.5)
Durability 10 10 (1.0) 9 (0.9) 5 (0.5) 7 (0.7)
Must Luxuries 10 10 (1.0) 10 (1.0) 5 (0.5) 5 (0.5)
Want Luxuries 3 10 (0.3) 9 (0.27) 5 (0.15) 9 (0.27)
Warranty 2 10 (0.2) 9 (0.18) 5 (0.1) 7 (0.14)
Financing Rate 3 5 (0.15) 5 (0.15) 10 (0.3) 5 (0.15)
Length of Car Loan 2 5 (0.1) 5 (0.1) 10 (0.2) 5 (0.1)
Total: 100 Average: 5.75 Average: 7.1 Average: 8.75 Average: 8.41
 RISK PROFILE
Alternative: No car is bought while I am in school
Uncertainty: Will my current car make it until I can afford to buy a new one
OUTCOME CHANCE CONSEQUENCE
Durability Affordability School effected
Car will make it 70% Questionable Highly affordable Not effected at all
Car will not make it 30% Questionable Expensive Could be effected

Alternative: Wait until last semester to buy a car

Uncertainty: Will I be able to afford a car during that last semester
OUTCOME CHANCE CONSEQUENCE
Durability Affordability School effected
Able to buy a car 80% Not questionable Expensive Could be effected
Not able to buy a car 20% Questionable Cheap Not effected at all

RISK DESIRABILITY
CONSEQUENCES
ALTERNATIVE OUTCOME DURABILITY AFFORDABILITY SCHOOL EFFECTED RANK DES. SC.
No Car Car will make it Q HA N 2 80
No Car Car will not make it Q E P 3 0
Wait Able to buy a car NQ E P 1 100
Wait Not able to buy a car Q C N 4 20

NO CAR
OUTCOME CHANCE DES. SCORE CONTRIBUTION
Car will make it 70% 80 56
Car will not make it 30% 0 0
TOTAL: 56

WAIT
OUTCOME CHANCE DES. SCORE CONTRIBUTION
Able to buy car 80% 100 80
Not able to buy car 20% 20 4
TOTAL: 84