Table of Contents

Wiley Handbooks in OPERATIONS RESEARCH AND MANAGEMENT SCIENCE

Title page

Copyright page

List of Figures

List of Tables

Foreword

This Handbook Is Timely

Decision Professionals: The Practitioner Perspective

Our Profession

The Biggest Challenge

Preface

Acknowledgments

Special Acknowledgments

Individual Acknowledgments

Chapter Acknowledgments

Handbook Chapter Reviewers

About the Authors

Acronyms

Chapter One: Introduction to Decision Analysis

1.1 Introduction

1.2 Decision Analysis Is a Socio-Technical Process

1.3 Decision Analysis Applications

1.4 Decision Analysis Practitioners and Professionals

1.5 Handbook Overview and Illustrative Examples

1.6 Summary

KEY TERMS

Chapter Two: Decision-Making Challenges

2.1 Introduction

2.2 Human Decision Making

2.3 Decision-Making Challenges

2.4 Organizational Decision Processes

2.5 Credible Problem Domain Knowledge

2.6 Behavioral Decision Analysis Insights

2.7 Two Anecdotes: Long-Term Success and a Temporary Success of Supporting the Human Decision-Making Process

2.8 Setting the Human Decision-Making Context for the Illustrative Example Problems

2.9 Summary

KEY TERMS

Chapter Three: Foundations of Decision Analysis

3.1 Introduction

3.2 Brief History of the Foundations of Decision Analysis

3.3 Five Rules: Theoretical Foundation of Decision Analysis

3.4 Scope of Decision Analysis

3.5 Taxonomy of Decision Analysis Practice

3.6 Value-Focused Thinking

3.7 Summary

KEY TERMS

ACKNOWLEDGMENTS

Chapter Four: Decision Analysis Soft Skills

4.1 Introduction

4.2 Thinking Strategically

4.3 Leading Decision Analysis Teams

4.4 Managing Decision Analysis Projects

4.5 Researching

4.6 Interviewing Individuals

4.7 Conducting Surveys

4.8 Facilitating Groups

4.9 Aggregating across Experts

4.10 Communicating Analysis Insights

4.11 Summary

KEY TERMS

Chapter Five: Use the Appropriate Decision Process

5.1 Introduction

5.2 What Is a Good Decision?

5.3 Selecting the Appropriate Decision Process

5.4 Decision Processes in Illustrative Examples

5.5 Organizational Decision Quality

5.6 Decision Maker’s Bill of Rights

5.7 Summary

KEY TERMS

Chapter Six: Frame the Decision Opportunity

6.1 Introduction

6.2 Declaring a Decision

6.3 What Is a Good Decision Frame?

6.4 Achieving a Good Decision Frame

6.5 Framing the Decision Opportunities for the Illustrative Examples

6.6 Summary

KEY TERMS

Chapter Seven: Craft the Decision Objectives and Value Measures

7.1 Introduction

7.2 Shareholder and Stakeholder Value

7.3 Challenges in Identifying Objectives

7.4 Identifying the Decision Objectives

7.5 The Financial or Cost Objective

7.6 Developing Value Measures

7.7 Structuring Multiple Objectives

7.8 Illustrative Examples

7.9 Summary

KEY TERMS

Chapter Eight: Design Creative Alternatives

8.1 Introduction

8.2 Characteristics of a Good Set of Alternatives

8.3 Obstacles to Creating a Good Set of Alternatives

8.4 The Expansive Phase of Creating Alternatives

8.5 The Reductive Phase of Creating Alternatives

8.6 Improving the Set of Alternatives

8.7 Illustrative Examples

8.8 Summary

KEY WORDS

Chapter Nine: Perform Deterministic Analysis and Develop Insights

9.1 Introduction

9.2 Planning the Model: Influence Diagrams

9.3 Spreadsheet Software as the Modeling Platform

9.4 Guidelines for Building a Spreadsheet Decision Model

9.5 Organization of a Spreadsheet Decision Model

9.6 Spreadsheet Model for the RNAS Illustrative Example

9.7 Debugging the Model

9.8 Deterministic Analysis

9.9 Deterministic Modeling Using Monetary Multidimensional Value Functions (Approach 1B)

9.10 Deterministic Modeling Using Nonmonetary Multidimensional Value Functions (Approach 1A)

9.11 Illustrative Examples

9.12 Summary

KEY TERMS

Chapter Ten: Quantify Uncertainty

10.1 Introduction

10.2 Structure the Problem in an Influence Diagram

10.3 Elicit and Document Assessments

10.4 Illustrative Examples

10.5 Summary

KEY TERMS

Chapter Eleven: Perform Probabilistic Analysis and Identify Insights

11.1 Introduction

11.2 Exploration of Uncertainty: Decision Trees and Simulation

11.3 The Value Dialogue

11.4 Risk Attitude

11.5 Illustrative Examples

11.6 Summary

KEY TERMS

Chapter Twelve: Portfolio Resource Allocation

12.1 Introduction to Portfolio Decision Analysis

12.2 Socio-Technical Challenges with Portfolio Decision Analysis

12.3 Single Objective Portfolio Analysis with Resource Constraints

12.4 Multiobjective Portfolio Analysis with Resource Constraints

12.5 Summary

KEY TERMS

Chapter Thirteen: Communicating with Decision Makers and Stakeholders

13.1 Introduction

13.2 Determining Communication Objectives

13.3 Communicating with Senior Leaders

13.4 Communicating Decision Analysis Results

13.5 Communicating Insights in the Illustrative Examples

13.6 Summary

KEY TERMS

Chapter Fourteen: Enable Decision Implementation

14.1 Introduction

14.2 Barriers to Involving Decision Implementers

14.3 Involving Decision Implementers in the Decision Process

14.4 Using Decision Analysis for Decision and Strategy Implementation

14.5 Illustrative Examples

14.6 Summary

KEY TERM

Chapter Fifteen: Summary of Major Themes

15.1 Overview

15.2 Decision Analysis Helps Answer Important Decision-Making Questions

15.3 The Purpose of Decision Analysis Is to Create Value for Shareholders and Stakeholders

15.4 Decision Analysis Is a Socio-Technical Process

15.5 Decision Analysts Need Decision-Making Knowledge and Soft Skills

15.6 The Decision Analysis Process Must Be Tailored to the Decision and the Organization

15.7 Decision Analysis Offers Powerful Analytic Tools to Support Decision Making

15.8 Conclusion

Appendix A Probability Theory

A.1 Introduction

A.2 Distinctions and the Clarity Test

A.3 Possibility Tree Representation of a Distinction

A.4 Probability as an Expression of Degree of Belief

A.5 Inferential Notation

A.6 Multiple Distinctions

A.7 Joint, Conditional, and Marginal Probabilities

A.8 Calculating Joint Probabilities

A.9 Dependent and Independent Probabilities

A.10 Reversing Conditional Probabilities: Bayes’ Rule

A.11 Probability Distributions

A.12 Combining Uncertain Quantities

Appendix B Influence Diagrams

B.1 Introduction

B.2 Influence Diagram Elements

B.3 Influence Diagram Rules

B.4 SUMMARY

Appendix C Decision Conferencing

C.1 Introduction

C.2 Conference Process and Format

C.3 Location, Facilities, and Equipment

C.4 Use of Group Processes

C.5 Advantages and Disadvantages

C.6 Best Practices

C.7 SUMMARY

KEY TERMS

Index