Prescribing Policies

Prescribing Policies

Introduction

The paper aims at understanding the process of prescribing policies. The paper attempts to answer given questions as a preparation to prescribe policies. The paper provides justification of selected program by identifying conditions in which each criterion might be an adequate measure of objective.

Discussion

There are six types of decision criterion that assist one to prescribe the policy and justify the made choice on rational basis. Following is an explicit exercise of decision criterion to justify standards of policy choice (Dunn, 2012).

Maximize Effectiveness at the Least Cost

Cost effective analysis might be a difficult approach to determine maximum effectiveness at least cost. However, the objective can be achieved by estimating the monetary value of achieved effectiveness and comparing it with the desired level of cost. A look at the figure 5.2 suggests that program III is a suitable option to achieve maximum effectiveness at least cost by offering valuable services (Dunn, 2012).

Maximize effectiveness at a fixed cost of $10,000

The objective of achieving maximized effectiveness at a fixed cost of $ 10, 000 means the deployment of type I error. In such condition where budget expenditures are based on certain constraints, the objective of maximized effectiveness can be achieved by prescribing an alternative policy that improves operations. For instance, a community hospital has a budget constraint of $ 5 million for each of the identified programs; a wise analyst will prescribe a policy that emphasizes on improving healthcare quality (Dunn, 2012).

Achieving Equal Cost and Equal Effectiveness

The objective to achieve fixed effectiveness of 6, 000 units at a fixed cost of $ 20, 000 refers to type IV problem. It means that an alternative policy should be recommended that not only keeps the cost under control, but also achieves the desired level of effectiveness and performance quality. For instance, a logistics company has a fixed budget to serve at least 50, 000 persons on an annual basis. Prescribed policy may either meet these constraints or suggest nothing (Dunn, 2012).

Maximizing Net Benefit

Maximizing net benefit would mean that the proportion of achieved effectiveness is more than the realized cost. A comprehensive cost benefit analysis of proposed policies may assist to prescribe a policy with maximized benefits. Net benefit can be calculated by subtracting the cost of an activity from the resulting outcome value (monetary) (Dunn, 2012).

Maximizing the ratio of benefits to costs

Type I error may help to achieve the objective of maximizing the ratio of benefit to cost. For instance, a transportation company has a unit cost of $ 10 with an objective to enhance number of served persons. The company can achieve this objective by deploying a policy that sets emphasis on cost effective modes of transportation service in order to provide maximum benefit to the passengers. In other words, a company can achieve maximum ratio of benefit to cost by achieving 8 units of service at a cost of $ 10, 500 (Dunn, 2012).

Program Selection

Program I and II are evaluated on the basis of six criterion of policy ...