Abstract: To reflect the characteristics of decision-makers’ psychology and behavior in an effective way, an approach for selecting product plan alternative based on uncertain linguistic information entropy and prospect theory is presented. Firstly, uncertain linguistic variables are used to express customer representatives’ preference values of a company and its competitors, and the competition priority ratings of each customer requirement are determined based on information entropy, then, the product plan alternatives can be developed. Secondly, the idea of prospect theory is introduced to analyze the alternatives’ cost, and the cost perceived values(CPVs) of each alternative are calculated. Thirdly, the values and weights of each risk scene and earnings scene are calculated to obtain the risk perceived values(RPVs) and earning perceived values(EPVs). Finally, according to combination of the CPVs, the RPVs and the EPVs, the comprehensive values of each alternative are determined to get the best alternative. A case study of PE crusher is given to prove the practicality and reliability of the proposed approach.

Key words: Customer requirement, Information entropy, Product plan alternative, Prospect theory, Quality function deployment