A Multi-stage Scheme Decision Model for Complex Products Based on Prospect Theory and Earned Value Method

Management Science and Engineering, School of Economics and Management, Harbin Engineering University, China

^* Corresponding author: 2533343249@qq.com

Abstract

The development process of complex products is highly uncertain and risky, cause the balance among progress, cost and technology needs to be comprehensively considered. Therefore, how to make decisions on key development plans becomes a problem that needs to be studied and solved. The existing multistage decision model needs to determine the complete stage division, quantity and attribute value of all alternatives in each stage of the development process at the beginning of the decision. However, actually, given the characteristics of long cycle of complex products, high technical risks, and many uncertainties, it is difficult to give the above information in advance in practical work. Therefore, in view of the above shortcomings, this paper proposes a multi-stage scheme decision-making method based on prospect theory and earned value method. First, based on the current progress and cost performance of the project, the dynamic reference point is set by analyzing the deviation between the actual implementation and the plan; Then, the dynamic prospect values of the schedule, cost and technical indicators of each alternative are calculated, and the optimal attribute weights and the comprehensive prospect values of each alternative are obtained by constructing a linear programming model; Finally, the advantages and innovation of the proposed model are further demonstrated through specific application examples.