Core Concepts #3: Resources

The “how” of tradespace exploration

This is part three of a seven-part series of posts on the core concepts of tradespace exploration, designed to help beginners become familiar with terminology and the general structure of tradespace data. Click here to find the other posts in this series, as well as other Tradespace 101 posts.

Alternatives are rarely free — when making a decision, we must spend resources in order to build, buy, own, and/or operate our chosen alternative. That makes resources the “how” of the decision: they are the means by which we make things happen. An alternative cannot be acquired if the requisite resources are not available. Resources are the costs and expenses incurred by stakeholders and, generally, stakeholders seek to minimize the resources spent.

Resources are often referred to as simply “cost” but it is important to recognize that resources come in many forms. Anyone familiar with the game Settlers of Catan knows that each resource (lumber, wool, grain, brick, ore) is important in its own right — and this is just as true in the real world! The following list shouldn’t be considered exhaustive, but it highlights five common resource types:

• Money is nearly always the primary (and sometimes the only) resource used to acquire an alternative, and is the main reason that “cost” is often used as shorthand for resources.
• Time is another resource that is frequently relevant but often forgotten. The sooner an alternative can be available to use, the sooner a stakeholder can get value from it. Time costs can come before acquisition (e.g. the length of the design/build/test phases of a new engineering system, or varying shipping times for an online purchase) as well as during setup/learning time before the alternative is usable. Time is a particularly important resource for decisions which need to have the alternative by a certain date — say, buying a birthday present online — making schedules ending near that date riskier (in the event of delay) and schedules later than that unacceptable.
• Materials that are consumed when building or using an alternative are resources as well. The Settlers of Catan example falls in this category, as do most manufacturing inputs. Accounting for materials is especially relevant when they cannot easily be purchased on demand: the availability of lithium is a key constraint for the manufacturing of electric car batteries.
• Effort can also be a limited resource. Fixing your car yourself might be cheaper than taking it to a mechanic, but the mental burden is much greater. And if you have to lift your engine block, the physical effort might even be too much for you to accomplish! For engineering applications, manpower is often needed for research tasks that take place during detailed design and development. If the manpower is not available, no amount of money can simply make these tasks be complete.
• Influence, such as favors or political capital, can be used to achieve alternatives that may not otherwise be possible. However, such influence is often expended upon use and must be treated as a limited resource — after all, some alternatives may require more favors than one can call in.

In many problems it is possible to exchange between resource types — e.g., you can pay more money to get faster shipping and save time, or you can spend influence asking a friend to help you move in order to lower the amount of effort you need to exert. If so, alternative variables can be used to differentiate these potential solutions in the tradespace (e.g., pay for overnight shipping, set to True or False).

As they say: time is money, money is time

Finally, stakeholders will often care about multiple types of resources — if we want to find a good alternative, we must understand each stakeholder’s individual needs/constraints for each relevant resource metric. However, multiple resource metrics can make visualizing and comparing alternatives difficult: the classic challenge of multi-criteria decision making. To simplify this comparison, a stakeholder’s stated needs are often used to create a value model that combines the different types of resources into a single “resource score”. Then, alternatives can be compared directly on this one dimension. We will cover the creation and use of value models in detail with a later post, but for now it is sufficient to know that it is a commonly used technique for aggregating disparate types of resources.

So the next time you are formulating a tradespace, be sure to consider if there are more resources than just money that should influence your decision. If you don’t? You might end up twiddling your thumbs while waiting around for that free shipping you couldn’t turn down. Don’t let yourself be blindsided by an unexpected expense!

When considering monetary costs, keep in mind that there are different colors of money for some applications, which may need to be treated as separate resources. The most common colors of money are purchase/acquisition cost versus operational/ownership cost — money spent now versus money committed for later. Stakeholders often have different preferences on these two types of resource expenditures and different budgets for each. Sometimes they are restricted by even more specific allocation requirements for their dollars: for example, funds for materials versus funds for research and development.

On the other hand, some stakeholders prefer to convert non-monetary resources into monetary equivalents in order to simplify by then adding them into a “total cost”: for example, deciding that the 5 hours of effort needed to fix your car yourself is worth $100, and adding that to the cost of parts before comparing it against the alternative of bringing it to the shop. This is a rudimentary value model, and it should be verified that the stakeholder does not have distinct preferences on the different types of resources before proceeding.

For some applications, effort must be further subdivided by skill/experience — essentially “tiers” of effort. For some tasks these resources may be able to be exchanged (e.g. 1 hour of “experienced” effort is worth 4 hours of “inexperienced” effort) but others may require specific skillsets or levels of experience.

In addition to the direct costs we have already discussed, there are also indirect costs such as negative externalities (side-effect consequences of the decision) and opportunity costs (the inability to take another opportunity due to the use of resources on this decision). These may need to be captured and traded for some applications, especially if they are as large or significant as the direct costs. Sometimes they are modeled as a benefit (to be minimized) rather than a resource, because indirect costs are not “spent” in the traditional sense of resources. Whether it is better to model them as benefits or resources is likely dependent on how the decision maker mentally conceptualizes the tradeoffs. More on benefits is coming in the next part of this series!