Influence Diagrams & Basic Decision Trees

Slides:

Advertisements

Similar presentations

A dapper young decision maker has just purchased a new suit for $200

Advertisements

© 2008 Prentice-Hall, Inc. Decision Analysis. © 2009 Prentice-Hall, Inc. 3 – 2 Decision Trees decision tree Any problem that can be presented in a decision.

Decision Theory.

1 1 Slide © 2001 South-Western College Publishing/Thomson Learning Anderson Sweeney Williams Anderson Sweeney Williams Slides Prepared by JOHN LOUCKS QUANTITATIVE.

Decision Analysis. What is Decision Analysis? The process of arriving at an optimal strategy given: –Multiple decision alternatives –Uncertain future.

1 1 Slide © 2008 Thomson South-Western. All Rights Reserved Slides by JOHN LOUCKS St. Edward’s University.

1 1 Slide © 2008 Thomson South-Western. All Rights Reserved © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or.

Decision Analysis Chapter 15: Hillier and Lieberman Dr. Hurley’s AGB 328 Course.

Chapter 7 Decision Analysis

Slides prepared by JOHN LOUCKS St. Edward’s University.

Chapter 4 Decision Analysis.

Decision Making Under Risk Continued: Decision Trees MGS Chapter 8 Slides 8b.

1 1 Slide © 2009 South-Western, a part of Cengage Learning Slides by John Loucks St. Edward’s University.

Decision analysis: part 1 BSAD 30 Dave Novak Source: Anderson et al., 2013 Quantitative Methods for Business 12 th edition – some slides are directly from.

Decision Tree Analysis. Decision Analysis Managers often must make decisions in environments that are fraught with uncertainty. Some Examples –A manufacturer.

Elements of Decision Problems

How to construct a decision tree 1.List each decision nodes & its alternatives. 2.List each chances nodes& its alternatives. 3.Draw the nodes and links.

Decision Analysis Dr. Saeed Shiry

MBA201a: Decision Analysis. Professor WolframMBA201a - Fall 2009 Page 1 Decision tree basics: begin with no uncertainty Basic setup: –Trees run left to.

Operations Management Decision-Making Tools Module A

Operational Decision-Making Tools: Decision Analysis

Decision Trees MHA 6350 Dr. Burton. A B A square with two or lines branching from the square represents a decision. This diagram represents two alternatives.

BU1004 Week 3 expected values and decision trees.

Decision Analysis. How to make a difficult decision?  Uncertainty regarding the future  Conflicting values or objectives  Goal of Decision Analysis:

1 1 Slide © 2005 Thomson/South-Western EMGT 501 HW Solutions Chapter 12 - SELF TEST 9 Chapter 12 - SELF TEST 18.

1 Chapter 3 Structuring Decision. 2 Structuring Decisions Learning Objectives Fundamental steps in model creation Identify and structure values and objectives.

Decision Making Under Risk Continued: Decision Trees MGS Chapter 6 Part 2.

Chapter 5 Planning

“ The one word that makes a good manager – decisiveness.”

Clinical Trials. What is a clinical trial? Clinical trials are research studies involving people Used to find better ways to prevent, detect, and treat.

Principles of Engineering System Design Dr T Asokan Decision Making in System Design.

1 Chapter 3 Structuring Decisions Dr. Greg Parnell Department of Mathematical Sciences Virginia Commonwealth University.

Quantitative Decision Making and Risk Management CS3300 Fall 2015.

Decision Trees and Influence Diagrams Dr. Ayham Jaaron.

Decision Analysis (cont)

Decision Analysis H.Malekinezhad Lecture 2. Definitions A decision is a choice between alternatives based on estimates of the values of those alternatives.

Decision & Risk Analysis Influence Diagrams, Decision Trees NOTE: Some materials for this presentation courtesy of Dr. Dan Maxwell Reference: Clemen &

Activity diagrams. Introduction ● Activity diagrams are a behavioural model that represent the dynamics of the system. ● An activity diagram is essentially.

Chapter McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved. Risk and Capital Budgeting 13.

Models for Strategic Marketing Decision Making. Market Entry Decisions To enter first or to wait Sources of First-Mover Advantages –Technological leadership.

Decision Trees. Introduction Decision trees enable one to look at decisions: with many alternatives and states of nature which must be made in sequence.

Decision Theory Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill.

Interaction Diagram An interaction diagram is a graphical representation of interactions between objects. Sequence diagram: shows the sequence in which.

Activity Diagrams Textbook References Chapter 6 – Pg. 165 – 171.

BUAD306 Chapter 5S – Decision Theory. Why DM is Important The act of selecting a preferred course of action among alternatives A KEY responsibility of.

QUANTITATIVE TECHNIQUES

DECISION MAKING TOOLS 1. Elements of Decision Problems 2.

1 1 © 2003 Thomson  /South-Western Slide Slides Prepared by JOHN S. LOUCKS St. Edward’s University.

© 2015 McGraw-Hill Education. All rights reserved. Chapter 16 Decision Analysis.

Decision Making Under Uncertainty: Pay Off Table and Decision Tree.

Situation David Chang is the owner of a small electronics company. In six months, a proposal is due for an electronic timing system for the 2016 Olympic.

CSE 110: Programming Language I Matin Saad Abdullah UB 404.

1 1 Slide © 2005 Thomson/South-Western Chapter 13 Decision Analysis n Problem Formulation n Decision Making without Probabilities n Decision Making with.

McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 4 Decision Analysis Building the Structure for Solving.

Decision Tree Analysis. Definition A Decision Tree is a graphical presentation of a decision-making process within a business which aims to highlight.

Business Process and Functional Modeling

Decisions under uncertainty and risk

Information Delivery Manuals: Process Mapping

Nevin L. Zhang Room 3504, phone: ,

Software Project Management

Chapter 5S – Decision Theory

16.5 Electrical Circuits.

Steps to Good Decisions

19/11/1439 Decision Analysis.

Decision Making Under Risk Continued: Decision Trees

Structure Charts Agenda: What are Structure Charts

Influence Diagrams, Decision

Elections and Running for

Interaction Models (2): Activity Diagrams

Constructing influence diagrams

Presentation transcript:

Influence Diagrams & Basic Decision Trees MHA 6350 Dr. Burton

Graphic symbols Nodes Arrows (arcs) are used to connect nodes Square = decisions Circles = chance events Rectangles with rounded corners = values Arrows (arcs) are used to connect nodes A node at the beginning of an arc is called a predecessor A node at the end of an arc is a called a successor

Venture Succeeds Or Fails Value Invest? Chance node Decision node Value node Venture Capital Decision

Rules for using arcs (arrows) Two kinds of arcs Solid: Point to chance and value nodes Dashed: Point to decisions Indicates the decision is made knowing the outcome of the predecessor node.

A B F E The outcome of Event A is relevant for assessing the chances associated with Event B. The decision maker knows outcome of Event E when making Decision F. C D G H Decision C is relevant for assessing the chances with Event D. Decision G is made before Decision H.

Building an influence diagram EPA must decide whether to use an economically beneficial chemical that may be carcinogenic. The decision must be made without perfect information about either the long-term benefits or health hazards. Alternative courses of action: -permit use of the chemical -restrict its use -ban it altogether Tests can be run to learn about the carcinogenic potential of the material. Survey data can indicate the extent of exposure when people use the chemical.

Usage decision Economic Value Net Value Cancer Cost Basic Influence Diagram

Usage decision Economic Value Net Value Human Exposure Cancer Cost Cancer Risk Carcinogenic potential Intermediate Influence Diagram

Test Usage decision Economic Value Survey Net Value Human Exposure Cancer Cost Cancer Risk Carcinogenic potential Completed Influence Diagram

Common Mistakes Influence Diagrams should not be confused with flow charts which are sequential in nature. Building influence diagrams with many chance nodes pointing to a primary decision node. Inclusion of cycles (circular paths among nodes).

Influence diagram vs. Decision tree Influences diagrams are excellent for displaying a decision’s structure, but they hide many details. A decision tree reveals more of the decision diagrams surface details.

Basic Decision tree (A politician’s decision) A popular political candidate’s options: Run for reelection to House of Rep. Run for a Senate seat If she chooses to run for the Senate there is a chance of losing. Source: Clemen,1990

Run for reelection U.S. Representative (intermediate) Win U.S. Senator (best) Run for Senate Lose Lawyer (worst) Basic Risky Decision

Win U.S. Representative Run for reelection Lose Small-time Lawyer Win U.S. Senator Run for Senate Lose Big-time Lawyer Double-Risk Decision

Accept Settlement Known Amount Highest Reject Settlement Amount of Court Award Lowest Range-of-Risk Decision

Exercise. (Given the information below draw a decision tree.) You have just bought a new $500 outfit. You are leaving for work. You consider taking an umbrella which will protect your outfit if it rains. Without the umbrella, the outfit could be ruined. If it does not rain, carrying the umbrella will be an inconvenience.