NEW DECISION MAKING TOOLS

McIlvaine has just introduced two important decision making tools for both purchasers and suppliers of air pollution control systems. One is a universal application classification system. The other is:  “Important Event Odds” an organized way to assess the value of market forecasts.

The universal application classification system will make the world “flat” to use the term in the well-known recent book. By identifying the location in the decision tree rather than a word description the translation difficulties are eliminated. Furthermore, decision making is classification. So a reliable classification system is contributing greatly to decision making.

You may lose a pump order to a competitor who reports lots of orders for pumps for FGD limestone systems. But if the decision tree identifies his success as pumps for the grinding circuit and the purchase is for the absorber recycle pump it becomes clear that his success is not relevant.

So the development of a universal classification system will internationalize the market and also benefit the companies with the best products and most experience. It will be particularly valuable in China where the system will eliminate any language problems.

The second tool is called “Important Event Odds”. Purchasers and suppliers  must make decisions  based on the likelihood of certain important events.  McIlvaine has projected the market for activated carbon for power plant mercury control based   on the passage of certain regulations by local and federal agencies, by the future economic growth, by the availability and price of various fuels, and by certain world security related events.

Rather than make forecasts on an “either/or” basis it is much more valuable to make them based on the odds of occurrence of each event. If one event which will shrink the market has only a one in ten chance of occurring whereas one which will increase the market has a ten to one positive odds of occurring then the forecast should reflect 90 percent of the impact of the occurrence.

Likewise the purchaser should make his decision based on the odds. Let’s say a new CAA has only a 50/50 chance of passage in 2009-10.  But there are a number of other regulatory initiatives each of which has only a 50-50 chance of forcing the purchase. The combination of four such 50/50 events makes the odds four to one that the purchase will be required.

 

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