Learning Objectives

At the end of the module, the student will know and do the following:  Understand the structure of a decision problem Know the assumptions and limitations of decision analysis techniques Know how to create and interpret payoff tables and decision trees Know how to select decision alternatives under conditions of risk Know how to select decision alternatives under conditions of uncertainty Know how to compute expected values Understand the concepts of sensitivity analysis and the value of information Be able to use a computer program for decision analysis applications

Readings

Anderson, D., Sweeney, D., and Williams, T. (1998). "Quantitative Methods for Business" (7th ed.). Cincinnati, OH: South-Western College Publishing. Chap 1 Introduction Chap 4 Decision Analysis Chap 2 Introduction to Probability (Optional: as required after reading Module 1.4-1.5 Notes and Text Chapter 4). Anderson, D., Sweeney, D., and Williams, T. (2000). "The Management Scientist for Windows 95, Windows 98, and Windows NT "(Version 5.0). Cincinnati, OH: South-Western College Publishing. Chap 1 Introduction Chap 11 Decision Analysis

Notes

The following topics are included in summary notes for Module One. Module 1.1 Notes: Introduction to Decision Analysis Module 1.2 Notes: Structuring the Decision Problem Module 1.3 Notes: Decision Making without Probabilities Module 1.4 Notes: Decision Making with Probabilities Module 1.5 Notes: The Value of Information

Assignment

The case assignment for Module 1 is Parts b.-g., Problem 18, McHuffter Condominiums, in the text, pp. 129-130. Although Part a. is not assigned for turn-in, it is recommended that you construct a draft/hand-drawn decision tree to help visualize the problem. Include branches depicting the option to conduct a survey, showing its three indicators of demand. Provide brief answers to Parts b.-g. in a Word file. Insert "The Management Scientist" decision analysis program OUT file in appropriate parts of the Word file. Please attach the word file to an e-mail to the instructor not later than Jan 27, 2001. Alternatively, you may answer the Parts b.-g. directly in an e-mail text. Insert "The Management Scientist" decision analysis program OUT file in the appropriate parts of the e-mail text and forward to the instructor not later than Jan 27, 2001. As a final alternative, you may fax your Word document and computer printouts to the instructor at (941) 590-7330 not later than Jan 27, 2001.

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