Guelen, Hanna Carmelli V.

ES034 Learning Activity 3

ACTION LEARNING EXERCISE FOR DECISION MAKERS 3.1: You are the Mayor

Based on the trend of the positive cases of the novel coronavirus, COVID 19, in Cebu, what would you
implement to lessen the number of the positive cases as the Cebu City Mayor and why? Give at least 3.
How can electronic communications such as the Internet and news be used to improve the decision-
making process?

With the rising number of positive cases in Cebu City, I, as the Cebu City mayor, will (1) strengthen
the COVID-19 mass testing for all people in Cebu City. To lessen the number of positive cases, we must
know exactly how many cases we are dealing with. There are many times when people think they don’t
have the virus, but they do. They are just asymptomatic. We can never fully tell that we have reduced the
number of positive cases unless we have an accurate figure through strengthened mass testing to
represent the rising trend. (2) With the invention of vaccines, may it be from Pfizer, AstraZeneca,
Moderna, or Sinovac, I will make vaccination known and accessible to all with the right rules and
regulations. I am not trying to make vaccination compulsory, since it would be a great disrespect to human
rights. Instead, I will make sure that the people will be well-informed, persuaded, and encouraged to be
vaccinated regardless of the brand of the vaccine. As a future chemical engineer, it has come to my
knowledge that regardless of the difference of efficacies of different brands of vaccines, it still provides
the right protection for the body. It is better than no protection at all. There have also been some cases
that people buy and fabricate vaccination cards even if they’re not vaccinated yet. I will make sure that
more strict rules and regulations will be implemented to people who fabricate vaccination cards for the
sake of travelling. (3) I will make even better and more comfortable isolation facilities. I have known from
a reliable source who was isolated in one of the isolation centers in Cebu City that one isolation room
would have about 6 covid-infected people. The bathrooms as well would often clog. This type of
environment breeds bacteria and may worsen the situation of the people in isolation centers. With this,
better isolation centers would be provided.

Electronic communications can be used to improve decision-making process by gathering all the
data from news and published academic studies. Qualitatively, the internet may contain suggestions and
criticism from the people about how the pandemic is handled. From this, information may be gathered
and used in the decision-making process of the involved individuals. Take it as an informal survey.
Moreover, in a quantitative sense, there are published academic studies regarding the pandemic. It may
be its composition or its effect towards the community, economy, or public health. These published
academic studies may be used as related literature in analyzing and studying the procedures and the
measures that needs to be taken to come up with a decision that benefits all the stakeholders.

ACTION LEARNING EXERCISE FOR DECISION MAKERS 3.2

Base on your possible solutions to lessen the case of COVID-19 in Cebu (Activity 3.1: You are the Mayor),
applying the decision-making process and define your actions on each of the steps in decision making.

Step 1. Identify and Define the Problem

There has been a rising number of positive cases based on the trend presented of the COVID-19.
The said trend causes an imbalanced ratio of patients and healthcare workers in hospitals and local
healthcare centers. The imbalance will negatively impact the public health and economy of the city. The
Guelen, Hanna Carmelli V. ES034 Learning Activity 3

rising trend may delay the opening and progress of businesses to open causing a downfall in the economy
due to limited number of customers. The problem for Cebu City is to lessen the number of positive cases.

Step 2: Generate and Evaluate Alternative Course of Action

The Cebu City government will strengthen mass testing for all the people in Cebu City. Provided
that the possible alternatives to be considered are (1) make vaccination programs accessible and
announced; (2) make better isolation centers with lesser number PUIs per room to maintain social
distancing; or (3) implement ECQ guidelines again to the city.

Step 3. Choose a Preferred Course of Action

The Cebu City government will strengthen mass testing to gain exact figures of cases in Cebu City
and adjust healthcare priorities.

Step 4. Implement the Decision

The Cebu City government will have more contact tracing teams. The contact tracing teams will
handle the mass testing to easily find the people who have encounter PUIs or PUMs. The healthcare unit
will then handle their isolations to uproot them from their current area to avoid the risk of transmission
incase it is an asymptomatic case.

Step 5. Evaluate Results

The Cebu City government will gather and analyze recorded data and figures. Previous trend will
be compared. Statistics and actual number of cases will be compared 6 months after the implementation
to see if the cases have decreased significantly.

ACTION LEARNING EXERCISE 3.3 – Oh! I didn’t know it’s a bias!

State any personal experience on each of the decision traps and bias.

Framing Errors

When I am in grocery stores, the first thing I check are the canned goods because I consider it as
a necessity in our household. Like any other processed food, it may not entirely be healthy. So, I check
labels with caution because there are canned goods that claim, for example, “75% Less Sodium” and the
other canned goods claim “25% Sodium”. But if you analyze it properly, it just says the same thought. That
is why it is very important to check the food labels before buying.

Availability Bias

Deciding to buy a phone is a hard decision. There are so many different brands to choose from
depending on the budget set. A couple of years ago, it was reported on the news of several Samsung
phones that exploded while charging. It happened to different Samsung users of that specific model. Ever
since then, I have already been skeptical and doubtful on whether I should choose a Samsung phone due
to that certain incident.
Guelen, Hanna Carmelli V. ES034 Learning Activity 3

Representativeness Bias

I like to watch beauty vloggers when they do their make-ups and share the make-up products that
they use. If there is one product that they didn’t like or they think is a waste of money because it didn’t
work on them, I am discouraged from trying that product even though I know that everyone may react
the to the product in a different way because of certain differences such as skin type.

Anchoring and Adjustment Bias

I was looking for a laptop that could handle heavy programs. I had a higher starting point thinking
of a budget of about Php 100 000. I had gaming laptops as my starting point. I ended up choosing a laptop
that cost almost Php 90 000. When I consulted with a friend who was knows more about computers than
me, he said that I could have bought a less expensive laptop but with the same capabilities.

Confirmation Error

Out of all the errors and biases, this has by far the most relatable. When I go to a mall just to do
some window shopping and I see something that I like, I tend to immediately but it without even thinking
about it. After the purchase, I keep on telling my self that I deserve it because I worked hard. But do I need
it, and will I ever get to use it? That remains unknown.

Escalating Commitment

When I was young, I try to buy one of those stickers that was being sold outside of our school in
the hopes of winning a goldfish or a chick. If I could remember it correctly, the chances were slim and yet
I kept on buying those tickets and exhausting both efforts and money just to win.

PROBLEM SOLVING 3.1 - Economic Order Quantity

The Alladin’s Carpet Discount Store in Paknaan, Mandaue stocks carpet in its warehouse and sells it
through an adjoining showroom. The store keeps several brands and styles of carpet in stock; however,
its biggest seller is Super Fly carpet. The store wants to determine the optimal order size and total
inventory cost for this brand of carpet given an estimated annual demand of 10,000 yards of carpet, an
annual carrying cost of 37.50 per yard, and an ordering cost of 7500. The store would also like to know
the number of orders that will be made annually and the time between orders (i.e., the order cycle)
given that the store is open every day except Sunday, Thanksgiving Day, and Christmas Day (which is
not on a Sunday) (311 days/yr). Determine the following:

A. Determine the optimal order quantity

B. Determine the number of orders per year
C. Determine the time between orders.
D. Determine the annual set-up cost.
E. Determine the annual holding cost.
F. What is the total inventory cost of the Q* system?

Given:
Estimated annual demand = 10 000 yards
Annual carrying cost = 37.50 / yard
Ordering cost = 7 500
Guelen, Hanna Carmelli V. ES034 Learning Activity 3

Working days/yr = 311 / yr

Required:
A. Q*
B. N
C. T
D. Setup Cost
E. Holding Cost
F. Total Inventory Cost

Solution:
2𝐷𝑆 2(10 000)(7 500)
A. 𝑄 ∗ = √ 𝐻
== √ 37.50
= 2 000 𝑢𝑛𝑖𝑡𝑠

𝐷 10 000
B. 𝑁 = 𝑄∗
= 2 000
= 5 𝑜𝑟𝑑𝑒𝑟𝑠 𝑝𝑒𝑟 𝑦𝑒𝑎𝑟

𝑤𝑜𝑟𝑘𝑖𝑛𝑔 𝑑𝑎𝑦𝑠 𝑝𝑒𝑟 𝑦𝑒𝑎𝑟 311

C. 𝑇 = 𝑁
= 5
= 62.2 ≈ 62 𝑑𝑎𝑦𝑠 𝑏𝑒𝑡𝑤𝑒𝑒𝑛 𝑜𝑟𝑑𝑒𝑟𝑠

𝐷 10 000
D. 𝑆𝑒𝑡𝑢𝑝 𝐶𝑜𝑠𝑡 = (𝑆) = (7500) = $37 500/𝑦𝑟
𝑄 2 000

𝑄 2 000
E. 𝐻𝑜𝑙𝑑𝑖𝑛𝑔 𝐶𝑜𝑠𝑡 = (𝐻) = (37.50) = $37 500/yr
2 2

F. 𝑇𝑜𝑡𝑎𝑙 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝐶𝑜𝑠𝑡 = 𝑆𝑒𝑡𝑢𝑝 𝐶𝑜𝑠𝑡 + 𝐻𝑜𝑙𝑑𝑖𝑛𝑔 𝐶𝑜𝑠𝑡 = $37 500 + $37 500 = $75 000

PROBLEM SOLVING 3.2 - Decision making under conditions of Uncertainty

1. Miguel and Enzo run a salad shop called "Himsug ug Baskug Salads Co". They need to make the
salads a day before, so they have to decide how many salads to make in advance each day before
they know the actual demand. Their choice is between 45, 55 and 65 salads. The following table
shows their profit or loss/ payoff table. Amount in Php.

States of Nature Decision Alternatives (Daily Supply)

(Daily Demand) 45 Salads 55 Salads 65 Salads
45 Salads 2000 1000 -1000
55 Salads 2000 2500 -500
65 Salads 2000 2500 2600

Determine the optimal decision alternative for the four types of criteria. For Criterion of Realism,
consider an index of optimism at α=65%.

Given:
α=65%
Guelen, Hanna Carmelli V. ES034 Learning Activity 3

Required:
Optical decision alternative for the four types of criteria

Solution:
1. Maximax Criterion (Optimist)
States of Nature Decision Alternatives (Daily Supply)
(Daily Demand) 45 Salads 55 Salads 65 Salads
45 Salads 2000 1000 -1000
55 Salads 2000 2500 -500
65 Salads 2000 2500 2600
Maximum Payoff 2000 2500 2600

The optimal decision alternative is to make 65 Salads with a maximum payoff of $2600.

2. Maximin Criterion ((Pessimist)

States of Nature Decision Alternatives (Daily Supply)
(Daily Demand) 45 Salads 55 Salads 65 Salads
45 Salads 2000 1000 -1000
55 Salads 2000 2500 -500
65 Salads 2000 2500 2600
Minimum Payoff 2000 1000 -1000

The optimal decision alternative is to make 45 Salads with $2000 as maximum out of the
minimum payoffs.

3. Minimax Regret Criterion (Opportunist)

States of Nature Decision Alternatives (Daily Supply)
(Daily Demand) 45 Salads 55 Salads 65 Salads
45 Salads 2000-2000 1000-2000 -1000-2000

0 1000 3000
55 Salads 2000-2500 2500-2500 -500-2500

500 0 3000
65 Salads 2000-2600 2500-2600 2600-2600

600 100 0
Maximum Regret 600 1000 3000

The optimal decision alternative is to make 45 Salads with a minimum of all the maximum
regret of $600.
Guelen, Hanna Carmelli V. ES034 Learning Activity 3

4. Criterion of Realism
States of Nature Decision Alternatives (Daily Supply)
(Daily Demand) 45 Salads 55 Salads 65 Salads
45 Salads 2000 1000 -1000
55 Salads 2000 2500 -500
65 Salads 2000 2500 2600
Maximum Payoff 2000 2500 2600
Minimum Payoff 2000 1000 -1000
2000*0.65 + (2000*0.35) 2500*0.65 + (1000*0.35) 2600*0.65 + (-1000*0.35)
Measure of Realism
2000 1975 1340
The optimal decision alternative is to make 45 Salads since the average for the 45 Salads
is the maximum.