Decision Making

Car Design Objectives 1.The Car should be safe 2.The Car should be economical to use 3.The car should be easy to manufacture 4.The Car should cause little pollution Constraints 1.The Car should not weight more than 700 lbs 2.The Car should resist a 5 MPH bumper impact without damage 3.The Car should cost less than $15,000

Concept Fan

Concept Combination Table

Concept Selection

Decisions Based on Objectives: Major Selection Satisfy Personal Interest Maximize Job Possibilities Maximize Starting Salary Rapid Growth Work Indoors Work Outdoors Maximize Job Stability Avoid Complex Courses Start a Business with little money Incorporate to Family Business Grow Family Business to next level Possibility of Travel

Decisions Based on Objectives: Major Selection Objectives 1.Satisfy Personal Interest 2.Maximize Starting Salary 3.Maximize Job Possibilities 4.Rapid Growth Constraints 1.Find a Job in your Home City 2.Minimum Starting Salary $4,000

Major Selection / Class Work

Major Selection

Major Selection 2 nd Example Objectives 1.Satisfy Personal Interest 2.Maximize Starting Salary 3.Incorporate to Family Business 4.Avoid Complex Courses 5.Grow Family Business to next level Constraints 1.Find a Job in your Home City 2.Minimum Starting Salary $4,000

Major Selection

Decisions based on Risk

To buy or not to buy an umbrella? You need to attend a meeting in impeccable conditions. Probability of raining is 30% and you need to cross a long uncovered park to get to the meeting. At the park entrance they sell umbrellas for $10 and the end of the park a store sells full clothing starting at $200

To buy or not to buy an umbrella?

Buying a Generator You have a business in a city where blackouts happen no more than once in a year with probability of 1%. Every time there is a blackout you loose $10,000. Should you pay $500 a month for backup power service?

To buy or not to buy an insurance You live in a country that may be hit by hurricanes. The cost of insurance is $ 3,000, it will cover all repairs but has a deductible of $4,000. It is Friday and in 5 minutes everybody will retire until Monday for the weekend. There is a forecast that with probability of 5% a hurricane will strike your city. Should you protect your $500,000?

Model used to guide an investment decision

You have $400,000 to invest. You can invest in a CD with no interest or in stocks. Investing in stocks has 80% probability of gaining $300,00 and 20% probability of loosing $100,000. Should you invest?

A student is undecided about selecting Major A or Major B. The following information is anticipated. ▫Major A Salary 5,000 monthly ▫Major B Salary 4,000 monthly ▫Major A probability of losing 1 semester.2 ▫Major B probability of losing 1 semester.1 Make a decision based in one year loses

A student is undecided about selecting Major A or Major B. The following information is anticipated. ▫Major A Salary 5,000 monthly ▫Major B Salary 4,500 monthly ▫Major A probability of losing 1 semester.3 ▫Major B probability of losing 1 semester.05 Make a decision based in one year loses

A student is undecided about selecting Major A or Major B. The following information is anticipated. ▫Major A Salary 5,000 monthly ▫Major B Salary 5,000 monthly ▫Major A probability of losing 1 semester.3 ▫Major B probability of losing 1 semester.05 Make a decision based in one year loses

Pay great attention to this video

Probability Probabilities are associated with experiments where the outcome is not known in advance or cannot be predicted The sample space S is the set of all possible outcomes in an experiment. An element in S is called a sample point. Each outcome of an experiment corresponds to a sample point Any subset of S is called an event.

Probability Sample space of rolling a die: ▫S = {1,2,3,4,5,6} The event “even”: ▫E = {2,4,6} The event Greater than 3: ▫E = {4,5,6} Sample space of tossing two coins ▫S = {HH,HT,TH,TT}

Probability

The complement of “even” is “odd”: ▫E = {1,3,5} The union of Greater than 3 and “odd”: ▫E = {1,3,4,5,6} The intersection of Greater than 3 and “odd”: ▫E = {5}

Receiver Operating Curve

The ROC curve was first used during World War II for the analysis of radar signals before it was employed in signal detection theory. Following the attack on Pearl Harbor in 1941, the United States army began new research to increase the prediction of correctly detected Japanese aircraft from their radar signals. In medicine, ROC analysis has been extensively used in the evaluation of diagnostic tests ROC curves are also used extensively in epidemiology and medical research and are frequently mentioned in conjunction with evidence-based medicine. In radiology, ROC analysis is a common technique to evaluate new radiology techniques. In the social sciences, ROC analysis is often called the ROC Accuracy Ratio, a common technique for judging the accuracy of default probability models. ROC curves also proved useful for the evaluation of machine learning techniques.