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A trade-off (or tradeoff) is a situation that involves losing one quality or aspect of something in return for gaining another quality or aspect. More colloquially, if one thing increases, some other thing must decrease. Tradeoffs can occur for many reasons, including simple physics (into a given amount of space, you can fit many small objects or fewer large objects). The idea of a tradeoff often implies a decision to be made with full comprehension of both the upside and downside of a particular choice, such as when a person decides whether to invest in stocks (more risky but with a greater potential return) versus bonds (generally safer, but lower potential returns).
The term is also used widely in an evolutionary context, in which case natural selection and sexual selection act as the ultimate "decision-makers". In biology, the concepts of tradeoffs and constraints are often closely related. In economics, a trade-off is commonly expressed as opportunity cost which is the preferred alternative when taking an economic decision.
Examples from common life
The concept of a tradeoff is often used to describe situations in every-day life. The old saying "do not put all of your eggs into one basket" implies a tradeoff with respect to spreading risk, as when buys a mutual fund composed of many stocks rather than only one or a few stocks. Similarly, trash cans can be small or large. A large trash can does not need to be put out for pickup so often, but it may become so heavy when full that one risks injury when trying to move it.
In cold climates, mittens serve well to keep the hands warm, but they do not allow the hands to function as well as do gloves. In a like fashion, warm coats are often bulky and hence difficult to store or even to hang up.
When copying music from compact disks to a computer, lossy compression formats, such as MP3, are used routinely to save harddisk space, but information is thrown away to the detriment of sound quality. Lossless compression schemes, such as FLAC or ALAC are a compromise solution.
In the Olympics, the best sprinters are not the same individuals as the best marathoners, a tradeoff based on various morphological, physiological (e.g., variation in muscle fiber type), and possibly motivational factors.
Tradeoffs in economics
In economics the term is expressed as opportunity cost, referring to the most preferred alternative given up. A tradeoff, then, involves a sacrifice that must be made to obtain a certain product, service or experience, rather than others that could be made or obtained using the same required resources. For a person going to a basketball game, their opportunity cost is the money and time expended, as compared with the alternative of watching a particular television program at home.
Many factors affect the tradeoff environment within a particular country, including availability of raw materials, a skilled labor force, machinery for producing a product, technology and capital, market rate to produce that product on reasonable time scale, and so forth.
Tradeoffs in other specific fields
Tradeoffs are important in engineering. For example, in electrical engineering, negative feedback is used in amplifiers to trade gain for other desirable properties, such as improved bandwidth, stability of the gain and/or bias point, noise immunity, and reduction of nonlinear distortion. The Golden Gate Bridge is a prime rare example where few engineering and aesthetic tradeoffs had to be made.
In demography, tradeoff examples may include maturity, fecundity, parental care, parity, senescence, and mate choice. For example, the higher the fecundity (# of offspring), the lower the parental care. Parental care as a function of fecundity would show a negative sloped linear graph.
- By compressing an image, you can reduce transmission time/costs at the expense of CPU time to perform the compression and decompression. Depending on the compression method, this may also involve the tradeoff of a loss in image quality.
- By using a lookup table, you may be able to reduce CPU time at the expense of space to hold the table, e.g. to determine the parity of a byte you can either look at each bit individually (using shifts and masks), or use a 256-entry table giving the parity for each possible bit-pattern, or combine the upper and lower nibbles and use a 16-entry table.
- For some situations (e.g. string manipulation), a compiler may be able to use inline code for greater speed, or call run-time routines for reduced memory; the user of the compiler should be able to indicate whether speed or space is more important.
The Software Engineering Institute have a specific method for analysing tradeoffs, called the Architectural Tradeoff Analysis Method or ATAM.
Ethics often involves competing interests that must be traded off against each other, such as the interests of different people, or different principles (e.g. is it ethical to use information resulting from Nazi human experiments to prevent disease today?)
In medicine, patients and physicians are often faced with difficult decisions involving tradeoff. One example is localized prostate cancer where patients need to weigh the possibility of a prolonged life expectancy against possible stressful treatment side-effects (patient trade-off).
Governmental tradeoffs are among the most controversial political and social difficulties of any time. All of politics can be viewed as a series of tradeoffs based upon which core values are most core to the most people or politicians. Political campaigns also involve tradeoffs, as when attack ads may energize the political base but alienate undecided voters.
Analytical methods to support a trade study
Trade studies are essentially decision-making exercises. In the FAA Systems Handbook. the decision analysis matrix (aka Pugh's method) is suggested to support the activities, but this method can not support uncertainty, a mix of quantitative and qualitative information, or teams. To manage uncertainty, the authors suggest supplementing point estimates of the outcome variables for each alternative with computed or estimated uncertainty ranges. The Standard Approach to Trade Studies, an INCOSE paper from 2004, suggests a similar approach.
In the NASA Systems Engineering Handbook NASA suggests using multi-attribute utility theoretic (MAUT) or the Analytic Hierarchy Process (AHP). But, these too are not good with uncertainty, mixed information and teams. The authors suggest using probability based methods to maximize utility when uncertainty predominates, but give little detail on how to approach this.
In many situations, linear programming methods like the simplex algorithm can be used but these too do not support uncertainty. Another approach to supporting trade studies with uncertain information is to use the Bayesian methods.
- Architecture tradeoff analysis method
- Biological constraints
- Carrier's constraint
- Detection error tradeoff
- Evolutionary medicine
- Evolutionary physiology
- Patient trade-off
- Space–time tradeoff
- Trade-off theory of capital structure
- Williamson trade-off model
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- Campbell, D. E., and J. S. Kelly. 1994. Trade-off theory. The American Economic Review 84:422-426.
- Haak, D. C., McGinnis, L. A., Levey, D. J., Tewksbury, J. J. 2012. Why are not all chilies hot? A trade-off limits pungency. Proc. R. Soc. B Biol. Sci. 279:2012-2017.
- Roff, D. A., Fairbairn, D. J. 2007. The evolution of tradeoffs: where are we? J. Evol. Biol. 20:433-447.
- Stearns, S. C. 1989. Trade-offs in life-history evolution. Functional Ecology 3:259-268.
- Garland, T., Jr. 2014. Quick guide: Tradeoffs. Current Biology 24:R60-R61.
- Tradeoffs and Constraints
- Tradeoffs and Constraints
- Keen, E. C. (2014). "Tradeoffs in bacteriophage life histories". Bacteriophage 4 (1): e28365. doi:10.4161/bact.28365. PMC 3942329. PMID 24616839.
- "National Airspace System: Engineering Manual Version 3.1, Section 4.6, Trade Studies". Federal Aviation Administration. 2006.
- Felix A. (2004). "Standard Approach to Trade Studies: A Process Improvement Model that Enables Systems Engineers to Provide Information to the Project Manager by Going Beyond the Summary Matrix" (PDF). INCOSE.
- "NASA Systems Engineering Handbook, Section 18.104.22.168 Trade Studies" (PDF). NASA. 2007.
- Ullman D. G., B. P. Spiegel (2006). "Trade Studies with Uncertain Information" (PDF). Sixteenth Annual International Symposium of the International Council On Systems Engineering (INCOSE).
Trade-Offs and the Bullwhip Effect A trade-off refers to any situation that entails losing an aspect or quality of an item in return for achieving another aspect. In the corporate context, the term is majorly used in cases where there is the need to get rid of some things in return for other better things (Khayum, 2003). There are a number of trade-offs that impact the operations of business organizations. Inventory Transportation Costs Inventory transportation costs refer to the costs of delivering unsold products from the producer to the business premises. This trade off would imply that the cost of transporting the products is reduced for the purpose of achieving other operations (Keeney, & Raiffa, 2003). The impact of this trade off would be the reduction in price of the inventories soon they are sold out in the market. It is prudent that the costs of transporting inventories from the producers to the business premises and later to the market are reflected on the final cost of sale of the products. Thus a reduction in this cost would have the implication of reducing their selling price. Cost-customer Service In some cases, organizations have opted to reduce almost all costs associated with the preparation of goods and services. For instance, the reduction of the cost of customer service has been a major step that some of the organizations are making. This trade-off has the impacts of limiting the kind of customer services that the organizations give to their clients. Such a case would eventually lead to poor public relations, thus, lacking proper communication methods between the organizations and the clients (Khayum, 2003). Admittedly, the reduction of the cost of customer service has the implication of poor quality services. Lead Time Transport Costs Lead time transport costs refer to the cost of transportation of goods within the period that elapses since they are produced till they are sold to the market. Efforts to get rid of this cost would have an impact on the immediate cost of transporting the products (Keeney, & Raiffa, 2003). The implication of this step would be that firms will have to take the risk of transporting the goods at a faster rate in order to reduce the time taken. Eventually, the costs incurred in these efforts will be reflected in the final cost of selling the products out in the market.