Decision Theory
LEARNING OBJECTIVES SUPPLEMENT OUTLINE 5S.5 Decision Making under Uncertainty, 219
After completing this supplement, you 5S.6 Decision Making under Risk, 220 5S.1 Introduction, 216
should be able to: 5S.7 Decision Trees, 2215S.2 The Decision Process and Causes of
L05S.1 Outline the steps in the decision Poor Decisions, 217 5S.8 Expected Value of Perfect
process. Information, 2235S.3 Decision Environments, 218
L05S.2 Name some causes of poor 5S.9 Sensitivity Analysis, 224
decisions. 5S.4 Decision Making under Certainty, 218
L05S.3 Describe and use techniques that
apply to decision making under
uncertainty.
L05S.4 Describe and use the expected-
value approach.
L05S.5 Construct a decision tree and use
it to analyze a problem.
L05S.6 Compute the expected value of
perfect information.
L05S.7 Conduct sensitivity analysis on a
simple decision problem.
55.1 INTRODUCTION
-
Decision theory represents a general approach to decision making. It is suitable for a wide
range of operations management decisions. Among them are capacity planning, product and
service design, equipment selection, and location planning. Decisions that lend themselves to
a decision theory approach tend to be characterized by the following elements:
1. A set of possible future conditions that will have a bearing on the results of the decision.
2. A list of alternatives for the manager to choose from.
3. A known payoff for each alternative under each possible future condition.
To use this approach, a decision maker would employ this process:
1. Identify the possible future conditions (e.g., demand will be low, medium, or high; the
competitor will or will not introduce a new product). These are called states of nature.
2. Develop a list of possible alternatives, one of which may be to do nothing.
t
3. Determine or estimate the payoff associated with each alternative for every possible
future condition.
---- ----------------------------------------~--
216
217 Supplement to Chapter Five Decision Theory
If possible, estimate the likelihood of each possible future condition.
5. Evaluate alternatives according to some decision criterion (e.g., maximize expected
profit), and select the best alternative.
The information for a decision is often summarized in a payoff table, which shows the
expected payoffs for each alternative under the various possible states of nature. These tables
are helpful in choosing among alternatives because they facilitate comparison of alternatives.
Consider the following payoff table, which illustrates a capacity planning problem.
POSSIBLE FUTURE DEMAND
Alternatives Low Moderate High
Small facility $10* $10 $10
Medium facility 7 12 12
Large facil ity (4) 2 16
'Present value in $ millions.
The payoffs are shown in the body of the table. In this instance, the payoffs are in terms
of present values, which represent equivalent current dollar values of expected .
This document outlines key concepts in decision theory. It begins by listing the learning objectives, which are to outline the decision process, describe causes of poor decisions, and techniques for decision making under uncertainty, risk, and using expected value approaches. It then describes the basic decision process and some causes of poor decisions like not following the full process or bounded rationality. It defines decision environments of certainty, risk, and uncertainty and the appropriate analysis techniques for each. It also describes approaches to decision making under each environment like maximin, maximax, and minimax regret. Finally, it discusses using expected monetary value for decision making under risk.
Chapter 6 Decision Making The Essence Of The Managers Job Ppt06D
The document discusses decision making and the decision making process for managers. It outlines 8 steps in the decision making process including identifying the problem, criteria, alternatives, analysis, selection, implementation, and evaluation. It also discusses rational decision making and biases managers may exhibit, such as overconfidence and anchoring effects. Finally, it provides guidelines for effective decision making including understanding cultural differences, using an effective process, and embracing complexity.
The document discusses decision making as the essence of a manager's job. It outlines an 8-step decision making process: 1) identify the problem, 2) identify decision criteria, 3) allocate weights to criteria, 4) develop alternatives, 5) analyze alternatives, 6) select an alternative, 7) implement the alternative, and 8) evaluate the decision. It also discusses types of problems/decisions, decision making styles, biases that can influence decisions, and guidelines for effective decision making.
This document discusses different approaches to decision making including certainty, uncertainty, and risk. It begins with an outline of the chapter which describes how managers need structure to make decisions in complex conditions. It then covers decision making with certainty, uncertainty using criteria like Laplace, Wald, and Savage, risk using expected values, and sequential decisions using decision trees. Limitations of the criteria are noted.
This document outlines the key concepts and steps in decision theory. It begins by listing the learning objectives related to decision making under uncertainty. It then describes the characteristics of problems suitable for decision theory and the general 5-step process. It discusses techniques for decision making under certainty, risk, and uncertainty, including expected monetary value. Examples are provided to illustrate concepts like payoff tables, maximin criterion, and decision trees. The document provides an overview of causes of poor decisions and mistakes to avoid in the decision process.
This document provides an overview of decision theory and decision making approaches under conditions of certainty, uncertainty, and risk. It defines key concepts in decision theory including alternatives, states of nature, payoffs, and decision criteria. Under certainty, the decision with the optimal payoff is chosen. Under uncertainty, approaches like maximax, maximin, minimax regret, and insufficient reason are used. Under risk, expected monetary value and expected opportunity loss can be calculated using known probabilities to identify the best alternative. The document uses examples to illustrate the application of each decision making approach.
This document discusses using Multiple Criteria Decision Analysis (MCDA) to help companies select countries for new business ventures. MCDA provides a formal, rigorous approach to evaluate multiple criteria, integrate both objective and subjective factors, and help decision-makers understand trade-offs between options. The document provides background on MCDA and reviews literature showing MCDA has not been widely used for country selection, especially among small businesses. It then presents an example MCDA model to analyze country selection criteria and rank potential countries.
This document outlines Chapter 14 of Managerial Accounting II which discusses decision making and relevant costs and benefits. It covers the six steps in the decision making process and the managerial accountant's role in providing relevant information to managers. Relevant information must be pertinent to the decision, differ among alternatives, involve future costs/benefits, and allow for predictions. The chapter illustrates the identification of relevant versus irrelevant costs through examples of equipment replacement and flight route decisions at an airline. Sunk costs that cannot be changed are deemed irrelevant, while future differential costs that vary among alternatives are relevant.
This document outlines key concepts in decision theory. It begins by listing the learning objectives, which are to outline the decision process, describe causes of poor decisions, and techniques for decision making under uncertainty, risk, and using expected value approaches. It then describes the basic decision process and some causes of poor decisions like not following the full process or bounded rationality. It defines decision environments of certainty, risk, and uncertainty and the appropriate analysis techniques for each. It also describes approaches to decision making under each environment like maximin, maximax, and minimax regret. Finally, it discusses using expected monetary value for decision making under risk.
Chapter 6 Decision Making The Essence Of The Managers Job Ppt06D
The document discusses decision making and the decision making process for managers. It outlines 8 steps in the decision making process including identifying the problem, criteria, alternatives, analysis, selection, implementation, and evaluation. It also discusses rational decision making and biases managers may exhibit, such as overconfidence and anchoring effects. Finally, it provides guidelines for effective decision making including understanding cultural differences, using an effective process, and embracing complexity.
The document discusses decision making as the essence of a manager's job. It outlines an 8-step decision making process: 1) identify the problem, 2) identify decision criteria, 3) allocate weights to criteria, 4) develop alternatives, 5) analyze alternatives, 6) select an alternative, 7) implement the alternative, and 8) evaluate the decision. It also discusses types of problems/decisions, decision making styles, biases that can influence decisions, and guidelines for effective decision making.
This document discusses different approaches to decision making including certainty, uncertainty, and risk. It begins with an outline of the chapter which describes how managers need structure to make decisions in complex conditions. It then covers decision making with certainty, uncertainty using criteria like Laplace, Wald, and Savage, risk using expected values, and sequential decisions using decision trees. Limitations of the criteria are noted.
This document outlines the key concepts and steps in decision theory. It begins by listing the learning objectives related to decision making under uncertainty. It then describes the characteristics of problems suitable for decision theory and the general 5-step process. It discusses techniques for decision making under certainty, risk, and uncertainty, including expected monetary value. Examples are provided to illustrate concepts like payoff tables, maximin criterion, and decision trees. The document provides an overview of causes of poor decisions and mistakes to avoid in the decision process.
This document provides an overview of decision theory and decision making approaches under conditions of certainty, uncertainty, and risk. It defines key concepts in decision theory including alternatives, states of nature, payoffs, and decision criteria. Under certainty, the decision with the optimal payoff is chosen. Under uncertainty, approaches like maximax, maximin, minimax regret, and insufficient reason are used. Under risk, expected monetary value and expected opportunity loss can be calculated using known probabilities to identify the best alternative. The document uses examples to illustrate the application of each decision making approach.
This document discusses using Multiple Criteria Decision Analysis (MCDA) to help companies select countries for new business ventures. MCDA provides a formal, rigorous approach to evaluate multiple criteria, integrate both objective and subjective factors, and help decision-makers understand trade-offs between options. The document provides background on MCDA and reviews literature showing MCDA has not been widely used for country selection, especially among small businesses. It then presents an example MCDA model to analyze country selection criteria and rank potential countries.
This document outlines Chapter 14 of Managerial Accounting II which discusses decision making and relevant costs and benefits. It covers the six steps in the decision making process and the managerial accountant's role in providing relevant information to managers. Relevant information must be pertinent to the decision, differ among alternatives, involve future costs/benefits, and allow for predictions. The chapter illustrates the identification of relevant versus irrelevant costs through examples of equipment replacement and flight route decisions at an airline. Sunk costs that cannot be changed are deemed irrelevant, while future differential costs that vary among alternatives are relevant.
This document discusses decision making tools and models. It outlines a six step process for decision making: 1) define the problem and influencing factors, 2) develop specific and measurable objectives, 3) develop a model of the relationship between objectives and variables, 4) evaluate alternatives and their merits/drawbacks, 5) select the best alternative, 6) implement the decision and set a timeline. It also discusses the fundamentals of decision making under uncertainty, risk, and certainty, including key terms like alternatives and states of nature.
This document describes a genetic learning algorithm called GLOWER that is designed for financial prediction problems. It discusses how financial prediction is difficult due to high dimensionality, weak nonlinear relationships between variables, and important variable interactions. Standard algorithms like decision trees are limited by their greedy search approach, which can miss complex patterns. Genetic algorithms can perform a more thorough search without biases. The paper evaluates GLOWER on several datasets and finds it uncovers more effective patterns than other algorithms for difficult problems with weak structure.
This document contains an assignment for MBA students at Rift Valley University in Harar, Ethiopia. The assignment covers various topics in managerial economics, including the effects of managerial decisions on firm value, areas of decision making, demand estimation and forecasting, elasticity of demand, production functions, costs, and market structures. Students are asked to analyze case studies, define key concepts, derive equations, and discuss topics like marginal cost, opportunity cost, economies and diseconomies of scale. The assignment involves quantitative and qualitative questions and requires applying economic principles to managerial decision making.
1. The document outlines concepts and techniques for decision theory, including decision making under certainty, risk, and uncertainty. It describes using expected value, decision trees, and sensitivity analysis to evaluate alternatives and make optimal decisions.
2. Key steps in decision making are identified as identifying alternatives and possible future states, estimating payoffs, and selecting the best alternative using decision criteria like expected monetary value.
3. Common errors in decision making include failures in properly defining the problem or alternatives, bounded rationality limiting rational analysis, and suboptimization where departments focus on their own goals.
This presentation summarizes key aspects of decision analysis and decision making under uncertainty. It discusses decision criteria like maximax, maximin, and Laplace that can be used when outcomes are uncertain. When probabilities are known, criteria for decision making under risk are used. Sequential decisions can be modeled with decision trees, which represent decisions, chances, and outcomes with nodes and paths. The presentation was given to MBA students on the topic of decision analysis.
Managers use a short-term horizon to maximize their utility function. Short-term profitability of banking institutions is one of the most important determinants of bonus packages and managers are therefore motivated to produce highest possible returns on equity by lowering equity buffers to the lowest possible level. Framing effects approach shows that managers engage into risk seeking behavior in order to avoid sure loss (thus, to guarantee that they receive higher bonus), although risk adverse behavior is a preferred choice. Lessons learned from the financial crisis are the importance of introducing behavioral finance concepts into a daily banking activities, increase information transparency, and try to find alternative measures of managers’ efficiency – measures that would stimulate setting up long-term value functions.
The document outlines learning objectives for a chapter on decision making. It discusses the eight steps in the decision-making process, factors that influence decision making like bounded rationality and intuition. It also describes different types of decisions, biases that can affect decision making, and strategies for effective decision making in complex environments.
The document discusses making investment decisions under uncertainty. It provides an example of a decision between investing in a large, medium, or small production facility based on possible future demand levels. A decision tree is developed to analyze the options, showing potential outcomes and their probabilities. The document explains how to construct a decision tree to evaluate investment alternatives systematically and determine the option with the highest expected value.
Decision making is one of the most important managerial activities. There are several approaches to decision making, including the classical model which assumes rationality and perfect information, and the administrative model which recognizes limitations like bounded rationality. Effective decision making involves defining the problem, identifying alternatives, evaluating alternatives based on feasibility, satisfaction and affordability, selecting the best alternative, implementing it, and following up on results. Behavioral aspects like intuition, politics and risk preferences also influence decisions.
1) The document discusses tools and techniques for managerial decision making. It explains that decision making is a process that involves multiple steps: establishing objectives, identifying alternatives, evaluating alternatives, selecting the best option, implementing, and monitoring performance.
2) Several economic tools are described that can help managers in decision making, including opportunity cost, incremental principle, time perspective principle, discounting principle, and equi-marginal principle. These tools help managers evaluate costs and revenues of different alternatives.
3) Managerial decision making is influenced not just by economics but also human/behavioral factors, technology, and the external environment. A variety of concepts from economic theory can assist managers in analyzing problems and making informed choices.
This document discusses decision theory and various approaches to decision making under different conditions of certainty, uncertainty, and risk. It covers topics such as decision alternatives, states of nature, payoffs, payoff tables, and criteria for decision making including maximax, maximin, Hurwicz, minimax regret, expected monetary value, and expected value of perfect information. The goal is to help decision makers determine the optimal approach and choice given whether the state of nature is known, unknown but probabilities are known, or unknown without probabilities.
Chapter Two
Decision Making
Decision Making: is defined as the process of selecting or choosing the best course of action from numbers of alternatives based on the criteria. Because managers are continually confronted with opportunities and problems, they must constantly analyze the effect of different decisions on their organizations and select the alternative that will move the firm toward its stated objectives.
Types of Decisions: Several authors believe that there are two types of decisions: programmed & non-programmed decisions.
A. Programmed decisions: These decisions are "programmable" because of a specific procedure can be worked out to resolve them based on experience in similar situations.
• Once a standard procedure has been established, it can be used to treat all like situations.
• They usually involve an organization's every day operational and administrative activities
• They are primarily found at the middle and lower levels of management.
• Data used in making a programmed decision usually are complete and well defined.
• Participants know the details and agree on how to resolve the problem.
B. Non-programmed Decisions: are used to solve nonrecurring problems/Non-Repetitive problems.
• No well-established procedure exists for handling them, primarily because managers do not have experience to draw upon.
• In contrast to programmed decisions, available data are usually incomplete.
• Non programmable decisions are commonly found at the middle and top levels of management and often is related to an organization's policy-making activities such as whether to add a product to the existing product line, to reorganize the company, or to acquire another firm, are examples
The steps in decision making process include the following:
1. Ascertain the need for a decision/Identify the problem:
The decision making process begins by determining a problem exists; that is, there is an unsatisfactory condition.
2. Establish decision criteria:
Once the need for a decision has been determined, there comes a need to establish decision criteria which requires identifying those characteristics that are important in making the decision.
3. Allocate weights to criteria
The identified criteria should be weighted based on their importance and arranged in priority. This is because some are obviously more important than others and we need to weight each criterion to reflect its importance in the decision.
4. Develop Alternatives
This involves developing a list of the alternative that may be viable in dealing with the stated problem.
5. Evaluate Alternatives
Once the alternatives are enumerated. The decision maker must critically evaluate each one and identify the strong and weak points when compared against the criteria and the weights established. In evaluating each alternative, we not only consider things that can be measured in numerical terms such as time and various types of fixed & operating costs,
Business decision, resource mgt and cost benefit analysisMohammed Jasir PV
The document provides information on decision making under conditions of certainty, risk, and uncertainty. It discusses three main types of decision making environments - certainty, where all outcomes are known; risk, where probabilities of outcomes are known; and uncertainty, where little is known about outcomes. Modern approaches to decision making under uncertainty include risk analysis, decision trees, and preference theory. Cost-benefit analysis is also summarized as a technique to evaluate the costs and benefits of potential decisions.
Here is a handout containing the PowerPoint Presentation contents of the of the Presentation version of this subject.
Decision Making in Terms of Engineering Management.
This document discusses principles of management related to decision making. It describes the eight steps in the decision making process as identifying a problem, criteria, weights, alternatives, analysis, selection, implementation, and evaluation. It also discusses three decision making models: rational, bounded rationality, and intuition. Finally, it classifies decisions as structured/programmed or unstructured/non-programmed and discusses biases that can affect decision making.
This document discusses decision making environments and techniques. It describes three types of decision making environments: decision making under certainty, uncertainty, and risk. It also discusses decision trees, Bayesian analysis, and utility theory as tools for decision making under uncertainty and risk. The key techniques covered are expected value analysis, maximax/maximin criteria, and expected opportunity loss criterion for decision making under risk.
This document discusses decision making in management. It begins by defining decision making as the process of choosing among alternatives. It then outlines the typical 8-step decision making process used by managers: 1) identifying a problem, 2) identifying decision criteria, 3) allocating weights to criteria, 4) developing alternatives, 5) analyzing alternatives, 6) selecting an alternative, 7) implementing the decision, and 8) evaluating the decision's effectiveness. The document also discusses different types of managerial decisions, approaches to decision making like rationality and bounded rationality, decision making conditions involving certainty, risk and uncertainty, and decision making styles.
Hours, A. (2014). Reading Fairy Tales and Playing A Way of Treati.docxsimonithomas47935
Hours, A. (2014). Reading Fairy Tales and Playing: A Way of Treating Abused Children. Journal Of Infant, Child & Adolescent Psychotherapy, 13(2), 122. doi:10.1080/15289168.2014.905337
Marshall, E. (2009). Girlhood, Sexual Violence, and Agency in Francesca Lia Block's "Wolf". Children's Literature In Education, 40(3), 217-234.
Sanyal, N., & Dasgupta, M. (2017). Fairy tales: The Emotional Processors of Childhood Conflicts in Dynamic Interpretative Lens. SIS Journal Of Projective Psychology & Mental Health, 24(1), 39-47.
Basile, G. (2012, May 24). Sun, Moon, and Talia. Enchanted Conversation, 1-4.
Grimm, J., & Grimm, W. (1975). Briar Rose: The Sleeping Beauty. London: Pelham.
.
How are authentication and authorization alike and how are the.docxsimonithomas47935
How are authentication and authorization alike and how are they different? What is the relationship, if any, between the two?
The paper should be 2 pages in length. Need to provide a minimum of two references and need to use APA format in the reference section and no playgarism
.
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This document discusses decision making tools and models. It outlines a six step process for decision making: 1) define the problem and influencing factors, 2) develop specific and measurable objectives, 3) develop a model of the relationship between objectives and variables, 4) evaluate alternatives and their merits/drawbacks, 5) select the best alternative, 6) implement the decision and set a timeline. It also discusses the fundamentals of decision making under uncertainty, risk, and certainty, including key terms like alternatives and states of nature.
This document describes a genetic learning algorithm called GLOWER that is designed for financial prediction problems. It discusses how financial prediction is difficult due to high dimensionality, weak nonlinear relationships between variables, and important variable interactions. Standard algorithms like decision trees are limited by their greedy search approach, which can miss complex patterns. Genetic algorithms can perform a more thorough search without biases. The paper evaluates GLOWER on several datasets and finds it uncovers more effective patterns than other algorithms for difficult problems with weak structure.
This document contains an assignment for MBA students at Rift Valley University in Harar, Ethiopia. The assignment covers various topics in managerial economics, including the effects of managerial decisions on firm value, areas of decision making, demand estimation and forecasting, elasticity of demand, production functions, costs, and market structures. Students are asked to analyze case studies, define key concepts, derive equations, and discuss topics like marginal cost, opportunity cost, economies and diseconomies of scale. The assignment involves quantitative and qualitative questions and requires applying economic principles to managerial decision making.
1. The document outlines concepts and techniques for decision theory, including decision making under certainty, risk, and uncertainty. It describes using expected value, decision trees, and sensitivity analysis to evaluate alternatives and make optimal decisions.
2. Key steps in decision making are identified as identifying alternatives and possible future states, estimating payoffs, and selecting the best alternative using decision criteria like expected monetary value.
3. Common errors in decision making include failures in properly defining the problem or alternatives, bounded rationality limiting rational analysis, and suboptimization where departments focus on their own goals.
This presentation summarizes key aspects of decision analysis and decision making under uncertainty. It discusses decision criteria like maximax, maximin, and Laplace that can be used when outcomes are uncertain. When probabilities are known, criteria for decision making under risk are used. Sequential decisions can be modeled with decision trees, which represent decisions, chances, and outcomes with nodes and paths. The presentation was given to MBA students on the topic of decision analysis.
Managers use a short-term horizon to maximize their utility function. Short-term profitability of banking institutions is one of the most important determinants of bonus packages and managers are therefore motivated to produce highest possible returns on equity by lowering equity buffers to the lowest possible level. Framing effects approach shows that managers engage into risk seeking behavior in order to avoid sure loss (thus, to guarantee that they receive higher bonus), although risk adverse behavior is a preferred choice. Lessons learned from the financial crisis are the importance of introducing behavioral finance concepts into a daily banking activities, increase information transparency, and try to find alternative measures of managers’ efficiency – measures that would stimulate setting up long-term value functions.
The document outlines learning objectives for a chapter on decision making. It discusses the eight steps in the decision-making process, factors that influence decision making like bounded rationality and intuition. It also describes different types of decisions, biases that can affect decision making, and strategies for effective decision making in complex environments.
The document discusses making investment decisions under uncertainty. It provides an example of a decision between investing in a large, medium, or small production facility based on possible future demand levels. A decision tree is developed to analyze the options, showing potential outcomes and their probabilities. The document explains how to construct a decision tree to evaluate investment alternatives systematically and determine the option with the highest expected value.
Decision making is one of the most important managerial activities. There are several approaches to decision making, including the classical model which assumes rationality and perfect information, and the administrative model which recognizes limitations like bounded rationality. Effective decision making involves defining the problem, identifying alternatives, evaluating alternatives based on feasibility, satisfaction and affordability, selecting the best alternative, implementing it, and following up on results. Behavioral aspects like intuition, politics and risk preferences also influence decisions.
1) The document discusses tools and techniques for managerial decision making. It explains that decision making is a process that involves multiple steps: establishing objectives, identifying alternatives, evaluating alternatives, selecting the best option, implementing, and monitoring performance.
2) Several economic tools are described that can help managers in decision making, including opportunity cost, incremental principle, time perspective principle, discounting principle, and equi-marginal principle. These tools help managers evaluate costs and revenues of different alternatives.
3) Managerial decision making is influenced not just by economics but also human/behavioral factors, technology, and the external environment. A variety of concepts from economic theory can assist managers in analyzing problems and making informed choices.
This document discusses decision theory and various approaches to decision making under different conditions of certainty, uncertainty, and risk. It covers topics such as decision alternatives, states of nature, payoffs, payoff tables, and criteria for decision making including maximax, maximin, Hurwicz, minimax regret, expected monetary value, and expected value of perfect information. The goal is to help decision makers determine the optimal approach and choice given whether the state of nature is known, unknown but probabilities are known, or unknown without probabilities.
Chapter Two
Decision Making
Decision Making: is defined as the process of selecting or choosing the best course of action from numbers of alternatives based on the criteria. Because managers are continually confronted with opportunities and problems, they must constantly analyze the effect of different decisions on their organizations and select the alternative that will move the firm toward its stated objectives.
Types of Decisions: Several authors believe that there are two types of decisions: programmed & non-programmed decisions.
A. Programmed decisions: These decisions are "programmable" because of a specific procedure can be worked out to resolve them based on experience in similar situations.
• Once a standard procedure has been established, it can be used to treat all like situations.
• They usually involve an organization's every day operational and administrative activities
• They are primarily found at the middle and lower levels of management.
• Data used in making a programmed decision usually are complete and well defined.
• Participants know the details and agree on how to resolve the problem.
B. Non-programmed Decisions: are used to solve nonrecurring problems/Non-Repetitive problems.
• No well-established procedure exists for handling them, primarily because managers do not have experience to draw upon.
• In contrast to programmed decisions, available data are usually incomplete.
• Non programmable decisions are commonly found at the middle and top levels of management and often is related to an organization's policy-making activities such as whether to add a product to the existing product line, to reorganize the company, or to acquire another firm, are examples
The steps in decision making process include the following:
1. Ascertain the need for a decision/Identify the problem:
The decision making process begins by determining a problem exists; that is, there is an unsatisfactory condition.
2. Establish decision criteria:
Once the need for a decision has been determined, there comes a need to establish decision criteria which requires identifying those characteristics that are important in making the decision.
3. Allocate weights to criteria
The identified criteria should be weighted based on their importance and arranged in priority. This is because some are obviously more important than others and we need to weight each criterion to reflect its importance in the decision.
4. Develop Alternatives
This involves developing a list of the alternative that may be viable in dealing with the stated problem.
5. Evaluate Alternatives
Once the alternatives are enumerated. The decision maker must critically evaluate each one and identify the strong and weak points when compared against the criteria and the weights established. In evaluating each alternative, we not only consider things that can be measured in numerical terms such as time and various types of fixed & operating costs,
Business decision, resource mgt and cost benefit analysisMohammed Jasir PV
The document provides information on decision making under conditions of certainty, risk, and uncertainty. It discusses three main types of decision making environments - certainty, where all outcomes are known; risk, where probabilities of outcomes are known; and uncertainty, where little is known about outcomes. Modern approaches to decision making under uncertainty include risk analysis, decision trees, and preference theory. Cost-benefit analysis is also summarized as a technique to evaluate the costs and benefits of potential decisions.
Here is a handout containing the PowerPoint Presentation contents of the of the Presentation version of this subject.
Decision Making in Terms of Engineering Management.
This document discusses principles of management related to decision making. It describes the eight steps in the decision making process as identifying a problem, criteria, weights, alternatives, analysis, selection, implementation, and evaluation. It also discusses three decision making models: rational, bounded rationality, and intuition. Finally, it classifies decisions as structured/programmed or unstructured/non-programmed and discusses biases that can affect decision making.
This document discusses decision making environments and techniques. It describes three types of decision making environments: decision making under certainty, uncertainty, and risk. It also discusses decision trees, Bayesian analysis, and utility theory as tools for decision making under uncertainty and risk. The key techniques covered are expected value analysis, maximax/maximin criteria, and expected opportunity loss criterion for decision making under risk.
This document discusses decision making in management. It begins by defining decision making as the process of choosing among alternatives. It then outlines the typical 8-step decision making process used by managers: 1) identifying a problem, 2) identifying decision criteria, 3) allocating weights to criteria, 4) developing alternatives, 5) analyzing alternatives, 6) selecting an alternative, 7) implementing the decision, and 8) evaluating the decision's effectiveness. The document also discusses different types of managerial decisions, approaches to decision making like rationality and bounded rationality, decision making conditions involving certainty, risk and uncertainty, and decision making styles.
Hours, A. (2014). Reading Fairy Tales and Playing A Way of Treati.docxsimonithomas47935
Hours, A. (2014). Reading Fairy Tales and Playing: A Way of Treating Abused Children. Journal Of Infant, Child & Adolescent Psychotherapy, 13(2), 122. doi:10.1080/15289168.2014.905337
Marshall, E. (2009). Girlhood, Sexual Violence, and Agency in Francesca Lia Block's "Wolf". Children's Literature In Education, 40(3), 217-234.
Sanyal, N., & Dasgupta, M. (2017). Fairy tales: The Emotional Processors of Childhood Conflicts in Dynamic Interpretative Lens. SIS Journal Of Projective Psychology & Mental Health, 24(1), 39-47.
Basile, G. (2012, May 24). Sun, Moon, and Talia. Enchanted Conversation, 1-4.
Grimm, J., & Grimm, W. (1975). Briar Rose: The Sleeping Beauty. London: Pelham.
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How are authentication and authorization alike and how are the.docxsimonithomas47935
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The paper should be 2 pages in length. Need to provide a minimum of two references and need to use APA format in the reference section and no playgarism
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Hot Spot PolicingPlace can be an important aspect of crime and.docxsimonithomas47935
Hot Spot Policing
"Place" can be an important aspect of crime and crime prevention. Behaviors occur across space and time. In the 1990's hot spot policing became a very popular topic.
In this paper, you need to address the following:
Define the concept of "Hot Spot" from the context of law enforcement,
Define the concept of "Hot Product" from the context of law enforcement,
Describe VIVA and CRAVE (as they relate to hot spots and hot products),
Identify a few products or objects that might be prime targets for crime, and
Indicate how these products or objects fit the ideas of VIVA and CRAVED.
.
HOSP3075 Brand Analysis Paper 1This is the first of three assignme.docxsimonithomas47935
This document provides instructions for the first assignment of a brand analysis paper. Students must choose a hotel brand and write a paper analyzing the brand using at least four sources. The paper should be organized using provided topic headings, including: brand overview and history; target markets; brand position; and brand elements. For each section, the document provides guidance on what information should be included. For example, for the brand overview and history section, it instructs students to provide a brief history and timeline of the brand, as well as information on the brand's geographic locations and parent company. MLA format is required.
Hou, J., Li, Y., Yu, J. & Shi, W. (2020). A Survey on Digital Fo.docxsimonithomas47935
Hou, J., Li, Y., Yu, J. & Shi, W. (2020). A Survey on Digital Forensics in Internet of Things IEEE Internet of Things Journal, I(1),1-15,.
Chen, J. & Zhu, Q. (2019). Interdependent Strategic Security Risk Management With Bounded Rationality in the Internet of Things. IEEE Transactions on Information Forensics and Security, 14(11), 2958-2971.
Borek, A. (2014). Total Information Risk Management: Maximizing the Value of Data and Information Assets (Vol. First edition). Amsterdam: Morgan Kaufmann
The readings this week discusses broad context of risk and investigative forensics. Part of risk management is to understand when things go wrong, we need to be able to investigate and report our findings to management. Using this research, or other research you have uncovered discuss in detail how risk and investigate techniques could work to help the organization. ERM helps to protect an organization before an attack, where as forensics investigate technique will help us after an attack - so lets discus both this week.
Please make your initial post and two response posts substantive. A substantive post will do at least two of the following:
Ask an interesting, thoughtful question pertaining to the topic
Answer a question (in detail) posted by another student or the instructor
Provide extensive additional information on the topic
Explain, define, or analyze the topic in detail
Share an applicable personal experience
Provide an outside source that applies to the topic, along with additional information about the topic or the source (please cite properly in APA 7)
Make an argument concerning the topic.
.
How (Not) to be Secular by James K.A. SmithSecular (1)—the ea.docxsimonithomas47935
How (Not) to be Secular? by James K.A. Smith
Secular (1)—the earthly plane of domestic life as distinguished from the sacred.
Secular (2)—areligious, neutral, unbiased, “objective”
Secular (3)—a world in which it is possible to imagine not believing in God; religious belief is no longer axiomatic.
Cross-pressured—The simultaneous pressure of various spiritual options or the feeling of being caught between an echo of transcendence and the drive toward immanentization.
Immanent frame—A constructed social space that frames our lives entirely within a natural order, an order “whose working could be systematically understood and explained in its own term, leaving open the question whether this whole order had a deeper significance....” (Taylor, A Secular Age, p. 15)
Exclusive humanism—A worldview that is able to account for meaning and significance without any appeal to the divine or transcendence.
Self-transcendence—a turning of life toward something beyond ordinary human flourishing. (Taylor, p. 44)
Fullness—The human impulsion to find significance, meaning, value—even within an entirely immanent frame.
Spin—A construal of life in an immanent frame that does not recognize itself as construal. Does not grant plausibility to the alternative,
Take—A construal of life in an immanent frame that is open to appreciating the viability of other takes.
Modern Moral Order (MMO)—Understanding of morality that focuses on the organization of society for mutual benefit rather than obligation to higher or eternal norms.
Faith
Faith Development Theory and a Look at Faith Today
Definitions of Faith
Faith (in general) = one’s ultimate concern (Paul Tillich)
Religious Faith = a relationship with God which engages a person’s total personhood; (Fischer and Hart reading); personal knowledge of God (Richard McBrien)
Faith is not primarily belief in ideas but in God
Difference between faith and “the faith”—the latter usually refers to a collection of “beliefs”
Misunderstandings of the Meaning of Faith
1. Having faith is believing things, “assenting to truths”—the rationalist misunderstanding
2. Having faith is behaving morally—the moralist misunderstanding
3. Having faith is feeling something —the emotionalist misunderstanding
These are all aspects of faith but faith cannot be reduced to any one of these.
Key Points about Faith
1. “Faith seeks understanding and is a friend of reason.” (The United States Catholic Catechism for Adults) In the words of Vatican I, faith is “consonant with reason.” Faith and reason are compatible. Faith is not “blind faith.”
2. Although faith has a content (beliefs), what Christians believe in are not the formulas of faith but in the realities they express.
3. Faith is a commitment of the whole person, not just the intellect of the person.
4. Faith is both personal and communal.
Faith Development Theory
Fowler’s Stages of Faith
Similar to Lawrence Kohlberg’s Stages of Moral Development
Overview of the Stages.
Hopefully, you enjoyed this class on Digital Media and Society.Q.docxsimonithomas47935
Hopefully, you enjoyed this class on Digital Media and Society.
Question #1:
Has your impression of digital media and society changed after taking this class? How? What in your opinion is the future of digital media and the Internet?
Topic 2: One Takeaway
There are no readings assigned this week. Reflect on the weekly Read & Watch content you have been exposed to throughout the semester to craft your response.
Discussion:
There are many interesting concepts, ideas, and theories presented in this class. We talked Curly Fries, Filter Bubbles, Global Collaboration, Digital Divide, Privacy, Big Data...
Question #1:
What is the most important thing you have learned from this class? What is your Number One Takeaway?
.
hoose (1) one childhood experience from the list provided below..docxsimonithomas47935
hoose
(1) one
childhood experience from the list provided below. This list has been generated from the Australian Institute of health and Welfare (2020) Australia’s Children report.
Asthma in children aged 5-14
Type 1 diabetes in children aged 0-14
Brain cancer in children up to 14 years
Anxiety disorders in children aged 5-14
Dental decay in children over 12
Overweight/Obesity in children 5-14
School aged child living with an intellectual disability
Children experiencing homelessness
Low birthweight babies
Children who are exposed to or a victim of family violence
After researching the prevalence of your chosen childhood experience, develop a brief hypothetical case study (200 words or so) about a child and their family highlighting the health care setting in which you (the nurse) meet the family;
the case study helps to guide your essay and provide context for your reader.
To explore the impact of your chosen childhood experience on the child and their family in the case study you have developed, read widely and address the following prompts informed by
contemporary and relevant
developmental, nursing and family care theory:
Outline the prevalence in Australia of the childhood experience chosen and highlight the short term, medium term and potential long term health outcomes/impact on the child
Discuss the impact (protective or otherwise) of family, culture and environment on the identified health outcomes for children identified from prompt 1
Explore the impact of the chosen childhood experience on the learning and development of the child in the case study, in light of their age/stage of development
When you (the nurse) meet the family (as outlined in your case study) how might you engage therapeutically with the child and family? Outline age/development appropriate communication strategies that you could adopt to support child/family flourishing
Based on the chosen childhood experience selected and the case study specifics, provide two priority nursing actions/interventions with rationales, that would advocate for positive child/family health outcomes
This essay will be developed with an introduction, body and conclusion, with correct grammar and spelling and acknowledging sources using APA 7th Edition referencing style. Word count of 2000 words +/-10% will be maintained; inclusive of intext references, excluding reference list.
Rubric
Assessment 3: Case study and literature review
Assessment 3: Case study and literature reviewCriteriaRatingsPtsThis criterion is linked to a learning outcome1.Case study developed is clear, informative and feasible
5
PtsExceeds expectationsVery well considered case study. The child/family circumstances are realistic and comprehensively presented in light of the chosen childhood experience; the context of the family and nurse interaction is clearly defined.4
PtsMeets ExpectationsWell considered case study. The child/family circumstances are realistic and thoroughly present.
honesty, hard work, caring, excellence HIS 1110 Dr. .docxsimonithomas47935
honesty, hard work, caring, excellence
HIS 1110 Dr. G. J. Giddings
ANALYSIS PAPER: GREAT MIGRATION HISTORY AS TACTIC
4 pages; 4 “works cited”/reference sources (at least 1 primary source)
Related Course Outcome: Identify and analyze connections between individual events and national
historic events.
OPTIONS I
Analysis Paper: Migration As Tactic/
Solution
(Long Interviews as main resource) (4 pages)
Millions of African Americans escaped or ran away from their homes in the South to seek refuge
in the North. Explore your individual interviewees’ descriptions of problems (lack of opportunities, racial
terrorism, personal reasons, etc.) they faced in the South or wherever, and how they attempted to
escape these problems by choosing migration as a tactic or solution. Explore how the individual
migration stories connect to or compare with the general Great Migration “push” and “pull” factors,
which motivated so many African Americans to leave the South. To help draw these connections,
identify and compare the “pull” and “push” factors of the Great Migration as well as other related
course themes such as: leadership tactics, African America socio-economic and culture status/state,
protest; demographic shifts/changes, etc.
OPTIONS II
Analysis Paper: Migration As Tactic/
.
hoose one of the four following visualsImage courtesy o.docxsimonithomas47935
hoose one of the four following visuals:
Image courtesy of: Nike® 2013 advertisement
Image courtesy of: Parents magazine June 2011
Image courtesy of: Harley Davidson® advertisement
Image courtesy of: Bank of America advertisement
In a
2-3-page APA formatted paper with an additional reference page
(
template here
), analyze the strategic use of perceptual visual communication:
Analyze how specific semiotic visuals in your chosen image affect different cultural perceptions (age, ethnicity, social group, etc.).
Describe how each culture’s cognitive memories and experiences may affect how they perceive this image.
Explain why cultural perception is important to consider when working with international or global cultures.
Discuss why it is important to consider cultural perception when interacting with different age cultures and different social groupings.
Support the items above by including relevant quotes and paraphrases from academic/scholarly sources.
.
HomeworkChoose a site used by the public such as a supermark.docxsimonithomas47935
Homework
Choose a site used by the public such as a supermarket, doctor's office, library, post office, or department store and observe one or more key processes, the associated suppliers, inputs, process steps, outputs, customers, the measurement systems, and how the measurements are used to manage and improve the process. Submit a Word document in which you include the following:
Company visited.
Process observed.
SIPOC elements.
Process measurements.
Process management systems used.
.
Homework 2 Please answer the following questions in small paragraph.docxsimonithomas47935
The document contains homework questions asking about the conditions in Europe that led to the conquest of America, the effects of the conquest on native peoples and Europeans, the motives and backgrounds of Spanish conquistadors, and factors explaining how a small number of Spaniards conquered large indigenous empires.
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BBA 2010-16J-5A21-S1, Introduction to Business
Unit VI
Upload Assignment: Unit VI Case Study
BBA 2010-16J-5A21-S1, Introduction to Business
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Course Resource Booklet (Final Submission Due)
Child Welfare Advocates have many resources available to them to assist those in need. The key is to know what resources are available. This assignment will require students to create resources on local and child welfare social services and present in a booklet format. This will be an ongoing course project as you learn about new resources in each module. As you continue with your classes, you may even choose to add additional resources.
Timeline
Module 1
— Course Resource Project assigned
Module 2
— Submit for instructor feedback – non-graded.
Students will submit the title page, introduction and one agency description in Module 2 for purposes of non-graded feedback.
Module 5
— Final Course Resource project due
Directions
Students will create a booklet that compiles information for twelve different agencies.
The twelve agencies must represent the following categories of general services. No category can be eliminated.
Adult Assistance — include one agency that specializes in helping the homeless
Child Development — include one agency that specializes in helping those in poverty
Family Support Services — include one resource on family violence
Health — include one agency that specializes in helping those with addiction
Legal — include the Guardian Ad Litem program
Mental Health
Each category should include:
A maximum of two agency resources for each category.
No more than one state agency may be included in each category.
Do not use the same agency more than once.
Agencies should be alphabetized by category.
Students should work on the Course Resource Booklet each module so they have a cumulative booklet ready for submission. Do not wait until the last minute.
Each local agency resource should include the following information. Use headings for components, as needed.
(See sample page attached.)
Name of Agency
Agency address (Domestic Violence shelters may use outreach center)
Website URL
Hours of Operation
Agency Description of 150 to 175 words
. This part of the resource booklet must be written and paraphrased in paragraph format and must include the following information:
(1.5 spacing for submission to instructor)
Mission/Purpose of the resource
Populations Served
Specific Type of Services
Eligibility Requirements
One strength and one limitation of the agency or its services
The final booklet should include:
A Title Page
Table of Contents
An introduction with a statement of purpose and definition of child welfare
Use paragraph form for agency description, strength and limitations of resource
Agency information should be alphabetized and spaced at 1.5
Use Times New Roman, size 12 font
Include page numbers
Be visually appealing and professional in appearance
Submit your document to Turnitin®. Turnitin® will tell you if you have copied text from o.
Homeless The Motel Kids of Orange CountyWrite a 1-2 page pa.docxsimonithomas47935
Homeless: The Motel Kids of Orange County
Write a 1-2 page paper double spaced using 12 point Calibri/Times New Roman font.
Your paper should be written using the “conflict” and “symbolic interactionism” perspective. 1) What was the premise of the video? 2) Give two examples of how the children understood the situation they are in. 3) Why or why not do you see hope for the children. 4) How did the video make you feel?
.
Home work 8 Date 042220201. what are the different between.docxsimonithomas47935
The document discusses two California government websites, waterboards.ca.gov and water.ca.gov and asks what the differences are between the agencies that run each site. It instructs the reader to visit both websites to learn more.
This document provides an overview of wound healing, its functions, stages, mechanisms, factors affecting it, and complications.
A wound is a break in the integrity of the skin or tissues, which may be associated with disruption of the structure and function.
Healing is the body’s response to injury in an attempt to restore normal structure and functions.
Healing can occur in two ways: Regeneration and Repair
There are 4 phases of wound healing: hemostasis, inflammation, proliferation, and remodeling. This document also describes the mechanism of wound healing. Factors that affect healing include infection, uncontrolled diabetes, poor nutrition, age, anemia, the presence of foreign bodies, etc.
Complications of wound healing like infection, hyperpigmentation of scar, contractures, and keloid formation.
This presentation was provided by Racquel Jemison, Ph.D., Christina MacLaughlin, Ph.D., and Paulomi Majumder. Ph.D., all of the American Chemical Society, for the second session of NISO's 2024 Training Series "DEIA in the Scholarly Landscape." Session Two: 'Expanding Pathways to Publishing Careers,' was held June 13, 2024.
Leveraging Generative AI to Drive Nonprofit InnovationTechSoup
In this webinar, participants learned how to utilize Generative AI to streamline operations and elevate member engagement. Amazon Web Service experts provided a customer specific use cases and dived into low/no-code tools that are quick and easy to deploy through Amazon Web Service (AWS.)
How Barcodes Can Be Leveraged Within Odoo 17Celine George
In this presentation, we will explore how barcodes can be leveraged within Odoo 17 to streamline our manufacturing processes. We will cover the configuration steps, how to utilize barcodes in different manufacturing scenarios, and the overall benefits of implementing this technology.
The chapter Lifelines of National Economy in Class 10 Geography focuses on the various modes of transportation and communication that play a vital role in the economic development of a country. These lifelines are crucial for the movement of goods, services, and people, thereby connecting different regions and promoting economic activities.
Philippine Edukasyong Pantahanan at Pangkabuhayan (EPP) CurriculumMJDuyan
(𝐓𝐋𝐄 𝟏𝟎𝟎) (𝐋𝐞𝐬𝐬𝐨𝐧 𝟏)-𝐏𝐫𝐞𝐥𝐢𝐦𝐬
𝐃𝐢𝐬𝐜𝐮𝐬𝐬 𝐭𝐡𝐞 𝐄𝐏𝐏 𝐂𝐮𝐫𝐫𝐢𝐜𝐮𝐥𝐮𝐦 𝐢𝐧 𝐭𝐡𝐞 𝐏𝐡𝐢𝐥𝐢𝐩𝐩𝐢𝐧𝐞𝐬:
- Understand the goals and objectives of the Edukasyong Pantahanan at Pangkabuhayan (EPP) curriculum, recognizing its importance in fostering practical life skills and values among students. Students will also be able to identify the key components and subjects covered, such as agriculture, home economics, industrial arts, and information and communication technology.
𝐄𝐱𝐩𝐥𝐚𝐢𝐧 𝐭𝐡𝐞 𝐍𝐚𝐭𝐮𝐫𝐞 𝐚𝐧𝐝 𝐒𝐜𝐨𝐩𝐞 𝐨𝐟 𝐚𝐧 𝐄𝐧𝐭𝐫𝐞𝐩𝐫𝐞𝐧𝐞𝐮𝐫:
-Define entrepreneurship, distinguishing it from general business activities by emphasizing its focus on innovation, risk-taking, and value creation. Students will describe the characteristics and traits of successful entrepreneurs, including their roles and responsibilities, and discuss the broader economic and social impacts of entrepreneurial activities on both local and global scales.
Temple of Asclepius in Thrace. Excavation resultsKrassimira Luka
The temple and the sanctuary around were dedicated to Asklepios Zmidrenus. This name has been known since 1875 when an inscription dedicated to him was discovered in Rome. The inscription is dated in 227 AD and was left by soldiers originating from the city of Philippopolis (modern Plovdiv).
Beyond Degrees - Empowering the Workforce in the Context of Skills-First.pptxEduSkills OECD
Iván Bornacelly, Policy Analyst at the OECD Centre for Skills, OECD, presents at the webinar 'Tackling job market gaps with a skills-first approach' on 12 June 2024
Andreas Schleicher presents PISA 2022 Volume III - Creative Thinking - 18 Jun...EduSkills OECD
Andreas Schleicher, Director of Education and Skills at the OECD presents at the launch of PISA 2022 Volume III - Creative Minds, Creative Schools on 18 June 2024.
Decision Theory LEARNING OBJECTIVES SUPPLEMENT OUTLINE 5S.5.docx
1. Decision Theory
LEARNING OBJECTIVES SUPPLEMENT OUTLINE 5S.5
Decision Making under Uncertainty, 219
After completing this supplement, you 5S.6 Decision Making
under Risk, 220 5S.1 Introduction, 216
should be able to: 5S.7 Decision Trees, 2215S.2 The Decision
Process and Causes of
L05S.1 Outline the steps in the decision Poor Decisions, 217
5S.8 Expected Value of Perfect
process. Information, 2235S.3 Decision Environments, 218
L05S.2 Name some causes of poor 5S.9 Sensitivity Analysis,
224
decisions. 5S.4 Decision Making under Certainty, 218
L05S.3 Describe and use techniques that
apply to decision making under
uncertainty.
L05S.4 Describe and use the expected-
value approach.
L05S.5 Construct a decision tree and use
it to analyze a problem.
L05S.6 Compute the expected value of
perfect information.
L05S.7 Conduct sensitivity analysis on a
simple decision problem.
2. 55.1 INTRODUCTION
-
Decision theory represents a general approach to decision
making. It is suitable for a wide
range of operations management decisions. Among them are
capacity planning, product and
service design, equipment selection, and location planning.
Decisions that lend themselves to
a decision theory approach tend to be characterized by the
following elements:
1. A set of possible future conditions that will have a bearing
on the results of the decision.
2. A list of alternatives for the manager to choose from.
3. A known payoff for each alternative under each possible
future condition.
To use this approach, a decision maker would employ this
process:
1. Identify the possible future conditions (e.g., demand will be
low, medium, or high; the
competitor will or will not introduce a new product). These are
called states of nature.
2. Develop a list of possible alternatives, one of which may be
to do nothing.
t
3. Determine or estimate the payoff associated with each
alternative for every possible
future condition.
---- ----------------------------------------~--
3. 216
217 Supplement to Chapter Five Decision Theory
If possible, estimate the likelihood of each possible future
condition.
5. Evaluate alternatives according to some decision criterion
(e.g., maximize expected
profit), and select the best alternative.
The information for a decision is often summarized in a payoff
table, which shows the
expected payoffs for each alternative under the various possible
states of nature. These tables
are helpful in choosing among alternatives because they
facilitate comparison of alternatives.
Consider the following payoff table, which illustrates a capacity
planning problem.
POSSIBLE FUTURE DEMAND
Alternatives Low Moderate High
Small facility $10* $10 $10
Medium facility 7 12 12
Large facil ity (4) 2 16
'Present value in $ millions.
The payoffs are shown in the body of the table. In this instance,
the payoffs are in terms
of present values, which represent equivalent current dollar
values of expected future income
less costs. This is a convenient measure because it places all
4. alternatives on a comparable
basis. If a small facility is built, the payoff will be the same for
all three possible states of
nature. For a medium facility, low demand will have a present
value of $7 million, whereas
both moderate and high demand will have present values of $12
million. A large facility will
have a loss of $4 million if demand is low, a present value of $2
million if demand is moder-
ate, and a present value of $16 million if demand is high.
The problem for the decision maker is to select one of the
alternatives, taking the present
value into account.
Evaluation of the alternatives differs according to the degree of
certainty associated with
the possible future conditions.
5S.2 THE DECISION PROCESS AND CAUSES
OF POOR DECISIONS
Despite the best efforts of a manager, a decision occasionally
turns out poorly due to unfore-
seeable circumstances. Luckily, such occurrences are not
common. Often, failures can be
traced to a combination of mistakes in the decision process, to
bounded rationality, or to
suboptimization.
The decision process consists of these steps:
1. Identify the problem.
2. Specify objectives and criteria for a solution.
3. Develop suitable alternatives.
5. 4. Analyze and compare alternatives.
5. Select the best alternative.
6. Implement the solution.
7. Monitor to see that desired result is achieved.
In many cases, managers fail to appreciate the importance of
each step in the decision-
making process. They may skip a step or not devote enough
effort to completing it before
jumping to the next step. Sometimes this happens owing to a
manager's style of making quick
decisions or a failure to recognize the consequences of a poor
decision. The manager's ego can
be a factor. This sometimes happens when the manager has
experienced a series of successes-
important decisions that turned out right. Some managers then
get the impression that they can
do no wrong. But they soon run into trouble, which is usually
enough to bring them back down
Payoff table Table showing
the expected payoffs for each
alternative in every possible state
of nature.
L05S.1 Outline the steps in
the decision process.
L05S.2 Name some causes of
poor decisions.
••
6. 218
Bounded rationality The
limitations on decision making
caused by costs, human abilities,
time, technology, and availability
of information.
Suboptimization The result
of different departments each
attempting to reach a solu-
tion that is optimum for that
department.
Certainty Environment in
which relevant parameters have
known values.
Risk Environment in which cer-
tain future events have probable
outcomes.
Uncertainty Environment in
which it is impossible to assess
the likelihood of various future
events.
EXAMPLE
55-1
Supplement to Chapter Five Decision Theory
to earth. Other managers seem oblivious to negative results and
continue the process they
associate with their previous successes, not recognizing that
7. some of that success may have
been due more to luck than to any special abilities of their own.
A part of the problem may be
the manager's unwillingness. to admit a mistake. Yet other
managers demonstrate an inability
to make a decision; they stall long past the time when the
decision should have been rendered .
Of course, not all managers fall into these traps-it seems safe to
say that the majority
do not. Even so, this does not necessarily mean that every
decision works out as expected.
Another factor with which managers must contend is bounded
rationality, or the limits
imposed on decision making by costs, human abilities, time,
technology, and the availability
of information. Because of these limitations, managers cannot
always expect to reach deci-
sions that are optimal in the sense of providing the best possible
outcome (e.g., highest profit,
least cost). Instead, they must often resort to achieving a
satisfactory solution.
Still another cause of poor decisions is that organizations
typically departmentalize deci-
sions. Naturally, there is a great deal of justification for the use
of departments in terms of
overcoming span-of-control problems and human limitations.
However, suboptimization can
occur. This is a result of different departments' attempts to
reach a solution that is optimum
for each. Unfortunately, what is optimal for one department may
not be optimal for the orga-
nization as a whole. If you are familiar with the theory of
constraints (see Chapter 16), subop-
timization and local optima are conceptually the same, with the
8. same negative consequences.
5S.3 DECISION ENVIRONMENTS
Operations management decision environments are classified
according to the degree of cer-
tainty present. There are three basic categories: certainty, risk,
and uncertainty.
. Certainty means that relevant parameters such as costs,
capacity, and demand have
known values.
Risk means that certain parameters have probabilistic outcomes.
Uncertainty means that it is impossible to assess the likelihood
of various possible future
events.
Consider these situations:
1. Profit per unit is $5. You have an order for 200 units. How
much profit will you make?
(This is an example of certainty since unit profits and total
demand are known.)
2. Profit is $5 per unit. Based on previous experience, there is a
50 percent chance of an
order for 100 units and a 50 percent chance of an order for 200
units. What is expected
profit? (This is an example of risk since demand outcomes are
probabilistic.)
3. Profit is $5 per unit. The probabilities of potential demands
are unknown. (This is an
example of uncertainty.)
The importance of these different decision environments is that
9. they require different anal-
ysis techniques. Some techniques are better suited for one
category than for others.
5S.4 DECISION MAKING UNDER CERTAINTY
When it is known for certain which of the possible future
conditions will actually happen, the
decision is usually relatively straightforward: Simply choose the
alternative that has the best
payoff under that state of nature. Example 5S-1 illustrates this.
Determine the best alternative in the payoff table on the
previous page for each of-the cases: It
is known with certainty that demand will be (a) low, (b)
moderate, (c) high.
219
'------~
Supplement to Chapter Five Decision Theory
Choose the alternative with the highest payoff. Thus, if we
know demand will be low, we
would elect to build the small facility and realize a payoff of :
10 million. If we know demand
will be moderate, a medium factory would yield the highest
payoff ($12 million versus either
$10 million or $2 million). For high demand, a large facility
would provide the highest payoff.
Although complete certainty is rare in such situations, this kind
of exercise provides some
perspective on the analysis. Moreover, in some instances, there
10. may be an opportunity to con-
sider allocation of funds to research efforts, which may reduce
or remove some of the uncer-
tainty surrounding the states of nature, converting uncertainty
to risk or to certainty.
5S.5 DECISION MAKING UNDER UNCERTAINTY
At the opposite extreme is complete uncertainty: 0 information
is available on how likely
the various states of nature are. Under those conditions, four
possible decision criteria
are maximin, maximax, Laplace, and minimax regret. These
approaches can be defined as
follows:
Maximin-Determine the worst possible payoff for each
alternative, and choose the
alternative that has the "best worst." The maximin approach is
essentially a pessimistic
one because it takes into account only the worst possible
outcome for each alternative.
The actual outcome may not be as bad as that, but this approach
establishes a "guaranteed
minimum."
Maximax-Determine the best possible payoff, and choose the
alternative with that pay-
off. The maximax approach is an optimistic, "go for it" strategy;
it does not take into
account any payoff other than the best.
Laplace-Determine the average payoff for each alternative, and
choose the alternative
with the best average. The Laplace approach treats the states of
nature as equally likely.
11. Minimax regret-Determine the worst regret for each alternative,
and choose the alter-
native with the "best worst." This approach seeks to minimize
the difference between the
payoff that is realized and the best payoff for each state of
nature.
The next two examples illustrate these decision criteria.
Referring to the payoff table on page 217, determine which
alternative would be chosen under
each of these strategies:
a. Maximin
b. Maximax
c. Laplace
a. Using maximin, the worst payoffs for the alternatives are as
follows:
Small facility: $10 million
Medium facility: 7 million
Large facility: -4 million
Hence, since $10 million is the best, choose to build the small
facility using the maximin
strategy.
b. Using maximax, the best payoffs are as follows:
Small facility: $10 million
Medium facility: 12 million
Large facility: 16 million
The best overall payoff is the $16 million in the third row.
Hence, the maximax criterion
12. leads to building a large facility.
SOLUTION
L05S.3 Describe and use
techniques that apply to deci-
sion making under uncertainty.
Maximin Choose the alterna-
tive with the best of the worst
possible payoffs.
Maximax Choose the alter-
native with the best possible
payoff.
Laplace Choose the alternative
with the best average payoff of
any of the alternatives.
Minimax regret Choose the
alternative that has the least of
the worst regrets.
EXAMPLE
5S-2
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SOLUTION
220
13. I #
EXAMPLE
5S-3
SOLUTION
Regret (opportunity loss)
Thedifferencebetweenagiven
payoffandthebestpayofffor a
stateofnature.
L05S.4 Describe and use the
expected-value approach.
Expected monetary value
(EMV) criterion The best
expectedvalue among the
alternatives.
Supplement to Chapter Five Decision Theory
c. For the Laplace criterion, first find the row totals, and then
divide each of those amounts
by the number of states of nature (three in this case). Thus, we
have
Row Total
(in $ millions)
Row Average
(in $ millions)
Small facility
Medium facility
14. Large facility
$30
31
14
$10.00
10.33
4.67
Because the medium facility has the highest average, it would
be chosen under the Laplace
criterion.
Determine which alternative would be chosen using a minimax
regret approach to the capac-
ity planning program.
The first step in this approach is to prepare a table of regrets (or
opportunity losses). To do
this, subtract every payoff in each column from the best payoff
in that column. For instance,
in the first column, the best payoff is 10, so each of the three
numbers in that column must be
subtracted from 10. Going down the column, the regrets will be
10 - 10 = 0, 10 - 7 = 3, and
10 - (-4) = 14. In the second column, the best payoff is 12.
Subtracting each payoff from
12 yields 2, 0, and 10. In the third column, 16 is the best
payoff. The regrets are 6, 4, and 0.
These results are summarized in a regret table:
REGRETS (IN $ MILLIONS)
Alternatives Low Moderate High Worst
15. ,Small facility $0 $2 $6 $6
Medium facility 3 0 4 4
Large facility 14 10 0 14
The second step is to identify the worst regret for each
alternative. For the first alternative,
the worst is 6; for the second, the worst is 4; and for the third,
the worst is 14.
The best of these worst regrets would be chosen using minimax
regret. The lowest regret is
4, which is for a medium facility. Hence, that alternative would
be chosen.
Solved Problem 6 at the end of this supplement illustrates
decision making under uncer-
tainty when the payoffs represent costs.
The main weakness of these approaches (except for Laplace) is
that they do not take into
account all of the payoffs. Instead, they focus on the worst or
best, and so they lose some
information. Still, for a given set of circumstances, each has
certain merits that can be helpful
to a decision maker.
5S.6 DECISION MAKING UNDER RISK
Between the two extremes of certainty and uncertainty lies the
case of risk: The probability
of occurrence for each state of nature is known. (Note that
because the states are mutually
exclusive and collectively exhaustive, these probabilities must
add to 1.00.) A widely used
approach under such circumstances is the expected monetary
value criterion. The expected
16. value is computed for each alternative, and the one with the best
expected value is selected.
The expected value is the sum of the payoffs for an alternative
where each payoff is weighted
by the probability for the relevant state of nature. Thus, the
approach is
Expected monetary value (EMV) criterion-Determine the
expected 'payoff or each
alternative, and choose the alternative that has the best expected
payoff.
Supplement to Chapter Five Decision Theory
Using the expected monetary value criterion, identify the best
alternative for the previous
payoff table for these probabilities: low = .30, moderate = .50,
and high = .20.
Find the expected value of each alternative by multiplying the
probability of occurrence for
each state of nature by the payoff for that state of nature and
summing them:
= .30($10)
= .30($7)
= .30($-4)
EVsmall
EVmedium
EVlarge
17. .50($10)
.50($12)
.50($2)
+ .20($10) = $10
.20($12) = $10.5
.20($16) = $3
+
+
+
+
+
Hence, choose the medium facility because it has the highest
expected value.
The expected monetary value approach is most appropriate
when a decision maker is nei-
ther risk averse nor risk seeking, but is risk neutral. Typically,
well-established organizations
with numerous decisions of this nature tend to use expected
value because it provides an indi-
cation of the long-run, average payoff. That is, the expected-
value amount (e.g., $10.5 million
in the last example) is not an actual payoff but an expected or
average amount that would be
approximated if a large number of identical decisions were to be
made. Hence, if a decision
maker applies this criterion to a large number of similar
decisions, the expected payoff for the
total will approximate the sum of the individual expected
payoffs.
18. 55.7 DECISION TREES
In health care the array of treatment options and medical costs
makes tools such as decision
trees particularly valuable in diagnosing and prescribing
treatment plans. For example, if a
20-year-old and a 50-year-old both are brought into an
emergency room complaining of chest
pains, the attending physician, after asking each some questions
on family history, patient his-
tory, general health, and recent events and activities, will use a
decision tree to sort through
the options to arrive at the appropriate decision for each patient.
Decision trees are tools that have many practical applications,
not only in health care but
also in legal cases and a wide array of management decision
making, including credit card
fraud; loan, credit, and insurance risk analysis; decisions on
new product or service develop-
ment; and location analysis.
A decision tree is a schematic representation of the alternatives
available to a decision
maker and their possible consequences. The term gets its name
from the treelike appearance
of the diagram (see Figure 5S.1). Although tree diagrams can be
used in place of a payoff
Payoff 1
Payoff 2
>-,
~e
19. °CJ",o
Payoff 3
Initial
decision
Payoff 4
C-?
00
6'(9
~ Payoff 5
Payoff 6
• Decision point o Chance event
221
EXAMPLE
55-4
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l05S.5 Construct a decision
tree and use it to analyze a
problem.
Decision tree A schematic
representation of the available
alternatives and their possible
consequences.
FIGURE 5S.1
Format of a decision tree
20. eXcel
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222
EXAMPLE
55-5
SOLUTION
Supplement to Chapter Five Decision Theory
table, they are particularly useful for analyzing situations that
involve sequential decisions.
For instance, a manager may initially decide to build a small
facility only to discover that
demand is much higher than anticipated. In this case, the
manager may then be called upon to
make a subsequent decision on whether to expand or build an
additional facility.
A decision tree is composed of a number of nodes that have
branches emanating from them
(see Figure 5S.1). Square nodes denote decision points, and
circular nodes denote chance
events. Read the tree from left to right. Branches leaving square
nodes represent alternatives;
branches leaving circular nodes represent chance events (i.e.,
the possible states of nature).
After the tree has been drawn, it is analyzed from right to left;
that is, starting with the
last decision that might be made. For each decision, choose the
alternative that will yield the
21. greatest return (or the lowest cost). If chance events follow a
decision, choose the alternative
that has the highest expected monetary value (or lowest
expected cost).
A manager must decide on the size of a video arcade to
construct. The manager has narrowed
the choices to two: large or small. Information has been
collected on payoffs, and a decision
tree has been constructed. Analyze the decision tree and
determine which initial alternative
(build small or build large) should be chosen in order to
maximize expected monetary value.
o ./;' $40
{'O~
N'l
0e
..0
,,~~ $40
~0'V.
)0
Overtime $50
E:'JrIJ
Cillo
$55
,,~~ ($10)
~0'V.
22. )0
o./;'
{'O~
Reo.
N'l
0e
..0 liCe
IJric $50es
High
oerr,
Cillo $70(.6)
S,..
"110-:ge
The dollar amounts at the branch ends indicate the estimated
payoffs if the sequence of
chance events and decisions that is traced back to the initial
decision occurs. For example, if
the initial decision is to build a small facility and it turns out
that demand is low, the payoff
will be $40 (thousand). Similarly, if a small facility is built,
demand turns out high, and a later
decision is made to expand, the payoff will be $55 (thousand).
The figures in parentheses on
branches leaving the chance nodes indicate the probabilities of
those states of nature. Hence,
the probability of low demand is .4, and the probability of high
demand is .6. Payoffs in
parentheses indicate losses.
Analyze the decisions from right to left:
23. 1. Determine which alternative would be selected for each
possible second decision. For a
small facility with high demand, there are three choices: do
nothing, work overtime, and
expand. Because expand has the highest payoff, you would
choose it. Indicate this by
placing a double slash through each of the other alternatives.
Similarly, for a large facility
with low demand, there are two choices: do nothing and reduce
prices'Xcsa would choose
reduce prices because it has the higher expected value, so a
double slash is placed on the
other branch.
Supplement to Chapter Five Decision Theory 223
Determine the product of the chance probabilities and their
respective payoffs for the
remaining branches:
Build small
Low demand .4($40) = $16
High demand .6($55) = $33
Build large
Low demand .4($50) = 20
High demand .6($70) = $42
Determine the expected value of each initial alternative:
Build small $16 + $33 = $49
Build large $20 + $42 = .62
24. Hence, the choice should be to build the large facility because it
has a larger expected
value than the small facility .
.8 EXPECTED VALUE OF PERFECT
INFORMATION
certain situations, it is possible to ascertain which state of
nature will actually occur in the
e. For instance, the choice of location for a restaurant may
weigh heavily on whether a
- . highway will be constructed or whether a zoning permit will
be issued. A decision maker
have probabilities for these states of nature; however, it may be
possible to delay a deci-
until it is clear which state of nature will occur. This might
involve taking an option to
_.; the land. If the state of nature is favorable, the option can be
exercised; if it is unfavorable,
option can be allowed to expire. The question to consider is
whether the cost of the option
ill be less than the expected gain due to delaying the decision
(i.e., the expected payoff
ve the expected value). The expected gain is the expected value
of perfect information,
EVPI.
Other possible ways of obtaining perfect information depend
somewhat on the nature of
- decision being made. Information about consumer preferences
might come from market
ch, additional information about a product could come from
product testing, or legal
rts might be called on.
25. There are two ways to determine the EVPL One is to compute
the expected payoff under
enainty and subtract the expected payoff under risk. That is,
Expected value of Expected payoff Expected payoff (5S-1)
perfect information under certainty under risk
"':-singthe information from Example 5S-4, determine the
expected value of perfect informa-
n using Formula 5S-1.
-=- t, compute the expected payoff under certainty. To do this,
identify the best payoff under
h state of nature. Then combine these by weighting each payoff
by the probability of that
e of nature and adding the amounts. Thus, the best payoff under
low demand is $10, the
t under moderate demand is 12, and the best under high demand
is $16. The expected
yoff under certainty is, then,
.30($10) + .50($12) + .20($16) = $12.2
L05S.6 Compute the expected
value of perfect information.
Expected value of perfect
information (EVPI) The
difference between the expected
payoff with perfect information
and the expected payoff
under risk.
EXAMPLE
5S-6
26. SOLUTION #
224
I~
EXAMPLE
5S-7
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SOLUTION
Ul5S.7 Conduct sensitivity
analysis on a simple decision
problem.
Sensitivity analysis Deter-
mining the rangeof probability
for which an alternativehas the
best expectedpayoff.
EXAMPLE
5S-8
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SOLUTION
Supplement to Chapter Five Decision Theory
The expected payoff under risk, as computed in Example 5S--4,
27. is $10.5. The EVPI is the dif-
ference between these:
EVPI = $12.2 - $10.5 = $1.7
This figure indicates the upper limit on the amount the decision
maker should be willing
to spend to obtain perfect information in this case. Thus, if the
cost equals or exceeds this
amount, the decision maker would be better off not spending
additional money and simply
going with the alternative that has the highest expected payoff.
A second approach is to use the regret table to compute the
EVPI. To do this, find the
expected regret for each alternative. The minimum expected
regret is equal to the EVPI.
Determine the expected value of perfect information for the
capacity-planning problem using
the expected regret approach.
Using information from Examples 5S-2, 5S-3, and 5S--4, we can
compute the expected regret
for each alternative. Thus: '
Small facility
Medium facility
Large facility
+ .20(6) = 2.2
+ .20(4) = 1.7 [minimum]
+ .20(0) = 9.2
.30(0)
28. .30(3)
.30(14)
+ .50(2)
+ .50(0)
+ .50(10)
The lowest expected regret is l.7, which is associated with the
second alternative. Hence, the
EVPI is $l.7 million, which agrees with the previous example
using the other approach.
5S.9 SENSITIVITY ANALYSIS
Generally speaking, both the payoffs and the probabilities in
this kind of a decision problem
are estimated values. Consequently, it can be useful for the
decision maker to have some
indication of how sensitive the choice of an alternative is to
changes in one or more of these
values. Unfortunately, it is impossible to consider all possible
combinations of every variable
in a typical problem. Nevertheless, there are certain things a
decision maker can do to judge
the sensitivity of probability estimates.
Sensitivity analysis provides a range of probability over which
the choice of alternatives
would remain the same. The approach illustrated here is useful
when there are two states of
nature. It involves constructing a graph and then using algebra
to determine a range of prob-
abilities for which a given solution is best. In effect, the graph
provides a visual indication
of the range of probability over which the various alternatives
are optimal, and the algebra
29. provides exact values of the endpoints of the ranges. Example
5S-8 illustrates the procedure .•.•.
Given the following table, determine the range of probability
for state of nature #2, that is,
P(2), for which each alternative is optimal under the expected-
value approach.
STATE OF
NATURE
#1 #2
A 4 12
Alternative B 16 2
C 12 8
First, plot each alternative relative to P(2). To do this, plot the
#1 value on the left side of the
graph and the #2 value on the right side. For instance, for
alternative A, plot 4 on the left side
of the graph and 12 on the right side. Then connect these two
points with a straight line. The
three alternatives are plotted on the graph as shown on the next
page.
Supplement to Chapter Five Decision Theory 225
16 16
14
12
30. 10
#2
8 Payoff
6
4
2
.8 1.0
14
12
10
#1
Payoff 8
6 I
I
4 I
I
2 I
--B best--~C best-i~--
o .2 .4 .6
P(2)
The graph shows the range of values of P(2) over which each
alternative is optimal. Thus,
31. low values of P(2) [and thus high values of P(l), since P(l) +
P(2) = 1.0], alternative B
have the highest expected value; for intermediate values of
P(2), alternative C is best; and
higher values of P(2), alternative A is best.
To find exact values of the ranges, determine where the upper
parts of the lines intersect.
e that at the intersections, the two alternatives represented by
the lines would be equivalent
terms of expected value. Hence, the decision maker would be
indifferent between the two
:nat point. To determine the intersections, you must obtain the
equation of each line. This
relatively simple to do. Because these are straight lines, they
have the form y = a + bx,
- e a is the y-intercept value at the left axis, b is the slope of the
line, and x is P(2). Slope
fined as the change in y for a one-unit change in x. In this type
of problem, the distance
'een the two vertical axes is 1.0. Consequently, the slope of
each line is equal to the right-
value minus the left-hand value. The slopes and equations are as
follows:
#1 #2 Slope Equation
4 12 12 - 4 = + 8 4 + 81'1:2)
16 2 2 -16 = -14 16 - 141'1:2)
12 8 8-12=- 4 12-41'1:2)
From the graph, we can see that alternative B is best from P(2)
5 0 to the point where that
ight line intersects the straight line of alternative C, and that
begins the region where C is
r. To find that point, solve for the value of P(2) at their
intersection. This requires setting
32. two equations equal to each other and solving for P(2). Thus,
16 - 14P(2) = 12 - 4P(2)
Rearranging terms yields
4 = lOP(2)
olving yields P(2) = AO. Thus, alternative B is best from P(2) =
0 up to P(2) = AO. B
C are equivalent at P(2) = AO.
Alternative C is best from that point until its line intersects
alternative A's line. To find that
ection, set those two equations equal and solve for P(2). Thus,
+ 8P(2) = 12 - 4P(2)
Rearranging terms results in
12P(2) = 8
olving yields P(2) = .67. Thus, alternative C is best from P(2) >
AO up to P(2) = .67,
re A and C are equivalent. For values of P(2) greater than .67 up
to P(2) = 1.0, A is best.
. ote: If a problem calls for ranges with respect to P(l), find the
P(2) ranges as above, and
subtract each P(2) from 1.00 (e.g., AO becomes .60, and .67
becomes .33).
226
SUMMARY
.. "