lecture 03 elements of a decision problem€¦ · objectives, attributes, and goals steps in...

The Decision BasisStructuring ObjectivesStructuring Decisions

Lecture 03Elements of a Decision Problem

Jitesh H. Panchal

ME 597: Decision Making for Engineering Systems Design

Design Engineering Lab @ Purdue (DELP)School of Mechanical Engineering

Purdue University, West Lafayette, INhttp://engineering.purdue.edu/delp

September 2, 2014c©Jitesh H. Panchal Lecture 03 1 / 25

http://engineering.purdue.edu/delp


Lecture Outline

1 The Decision BasisDecision Basis and StructureObjectives, Attributes, and Goals

2 Structuring ObjectivesHierarchical Nature of ObjectivesFundamental vs. Means ObjectivesDesirable Properties of Sets of ObjectivesAttributes

3 Structuring DecisionsInfluence DiagramsDecision Trees

c©Jitesh H. Panchal Lecture 03 2 / 25


Decision Basis and StructureObjectives, Attributes, and Goals

The Structure of a Design Decision

Decision

A1

A2

An

O11

O12

O1k

O21

O22

O2k

On1

On2

Onk

U(O11)

U(O12)

U(O1k)

U(O21)

U(O22)

U(O2k)

U(On1)

U(On2)

U(Onk)

Select Ai

p11

p1k

p21

p1k

pn1

pnk

Alternatives Outcomes Preferences Choice

Slide courtesy: Chris Paredisc©Jitesh H. Panchal Lecture 03 3 / 25



Alternative-Focused vs. Value Focused Decision Making

Limitations of alternative-focused approaches:1 Simply choosing readily available alternatives2 No attention on the interaction between values and the creation of

alternatives3 All effort reserved for partial evaluation of given alternatives4 Criteria do not reflect fundamental objectives, but rather proxies5 Achievement of different objectives is not systematically integrated




The Decision Basis: A Formal Representation of the Problem

P

R

O

B

L

E

M

Synthesis - Elicitation

D

E

C

I

S

I

O

N

Analysis –

Logical Evaluation

DECISION BASIS

Choice

Information

Preferences

Alternatives

Models

Probability

Assignments

Value

Time & Risk

Preferences

Howard, R. A., Decision Analysis: Practice and Promise, Management Science, Vol. 34, No. 6 (Jun., 1988) , pp. 679-695




Steps in Modeling a Design Decision

1 Identify the decision situation2 Determine the objectives3 Choose the attributes4 Identify design alternatives and design variables5 Model the decision structure with an influence diagram or a decision tree




Terminology

Objective: An objective is a specific thing that you want to achieve. Anobjective indicates the “direction” in which we should do better, e.g.,minimize weight.

Values: An individual’s objectives taken together make up his/hervalues. Values of the decision makers are made explicit with objectives.

Goal: A goal is different from an objective in that it is either achieved ornot. Goals are useful for clearly identifying a level of achievement tostrive toward, e.g., weight should be less than 100 kg.

Attribute: provides a scale for measuring the degree to which itsrespective objective is met.

After identifying attributes, we need preferences towards them, and

uncertainty in achieving them. (Focus of future lectures)



Fundamental vs. Means ObjectivesDesirable Properties of Sets of ObjectivesAttributes

Fundamental vs. Means Objectives

Fundamental objectivesRepresent the reasons why the decision maker cares about the decision,and, more importantly, how the available alternatives should be evaluated.Can be decomposed hierarchically into a treeThere should be no overlap between different branches of the tree

Means objectivesHelp to achieve fundamental objectives (be careful! often dependent onsystem alternative)Important only because of its implications for some other objectiveOrganized into a network of objectives




Fundamental Objectives Hierarchy: Example

Maximize

Safety

Minimize

Loss of Life

Minimize

Serious Injuries

Minimize

Minor Injuries

Adults Children Adults Children




Determining Whether An Objective is Fundamental or Means

Separate means and fundamental objectives by asking “Why is thatImportant?” (WITI)

Objective: “Minimize the distance the material is transported by trucks”Why is that important?“Because shorter distances would reduce the chances of accident.However it may turn out that shorter transportation routes go throughmajor cities, exposing more people to the hazardous material, and thismay be undesirable.” This points to objectives related to traffic accidents,costs, and exposure.Why is that important?Accidents: “with fewer accidents, there may be fewer highway fatalitiesand less accidental exposure of the public to the hazardous material.”Why is it important to maximize exposure?“Because we want to minimize the health impacts of the hazardousmaterial”Why is it important to minimize health impacts?“It is simply important...” ⇒ Fundamental objective!

Keeney, R.L., “Creativity in Decision Making with Value-Focused Thinking,” Sloan Management Review, Vol. 35, No. 4, pp. 33-41, Summer1994.




Why Structure Objectives in a Hierarchy?

1 Higher levels of objectives can be identified relatively easily.2 Higher level objectives provide a basis for specifying lower-level

objectives.3 Hierarchy helps in identifying missing objectives.4 It is easier to identify attributes to measure the achievement of lower

level objectives than that of higher level objectives.5 The attributes for lower-level objectives collectively indicate the degree to

which the associated higher-level objective is achieved.6 The complete set of lower-level attributes for a fundamental objectives

hierarchy provides a basis for describing the consequences in thedecision problem and for assessing an objective function appropriate forthe problem.

Keeney, R.L., Value-Focused Thinking: A Path to Creative Decision-Making, Harvard University Press, 1992.




Another Example of an Objectives Hierarchy

Evaluating passenger transport facilities

Figure 2.2, Page 42 (Keeney and Raiffa, 2003)




Desirable Properties of Fundamental Objectives

1 Essential, to indicate consequences in terms of fundamental reasons forinterest in the decision situation.

2 Controllable, to address consequences that are influenced only by thechoice of alternatives in the decision context.

3 Complete, to include all fundamental aspects of the consequences of thedecision alternatives.

4 Measurable, to define the objectives precisely and to specify the degreesto which objectives may be achieved.





Desirable Properties of Fundamental Objectives (contd.)

5 Operational, to render the collection of information required for ananalysis reasonable considering the time and effort available.

6 Decomposable, to allow the separate treatment of different objectives inthe analysis.

7 Non-redundant, to avoid double-counting of possible consequences.8 Concise, to reduce the number of objectives needed for the analysis of a

decision9 Understandable, to facilitate generation and communication of insights

for guiding the decisionmaking process.





Means Objective Network: Example

Means Objectives help to achieve fundamental objectives.

Maximize

Safety

Maximize use of

vehicle-safety features

Minimize

accidents

Motivate purchase

of safety features

on vehicles

Maintain

vehicles

properly

Require safety

features

Maximize

driving quality

Educate public

about safety

Enforce traffic

laws

Have reasonable

traffic laws

Minimize driving

under influence

of alcohol




How to construct mean-objective networks and fundamental-objectiveshierarchies?

1 Fundamental ObjectivesTo move downward in the hierarchy: “What do you mean by that?”To move upward in the hierarchy: “Of what more general objective is this anaspect?”

2 Means ObjectivesTo move away from fundamental objectives: “How could you achieve this?”To move toward fundamental objectives: “How is that important?” (WITI)




Relating Fundamental and Means Objectives

Summer intern decision

Figure 3.4 on page 48 (Clemen, 1997)




Nature of Attributes

Attributes provide a scale for measuring the degree to which its respectiveobjective is met. Attributes should be

1 Comprehensive: knowing the level of an attribute, we get a clearunderstanding of the extent that the objective is achieved.

2 Measurable: we can either assign a point value, or obtain a probabilitydistribution (for each alternative) over the possible levels of the attribute.AND we can assess the decision maker’s preferences for the differentlevels of the attribute.

3 Relevant, and not subject to other extraneous considerations.



Influence DiagramsDecision Trees

Structuring the Decision Elements

Influence diagrams and decision trees provide two approaches forstructuring the decision elements:

1 Decisions and Alternatives2 Uncertain Events3 Objectives

P

R

O

B

L

E

M

Synthesis - Elicitation

D

E

C

I

S

I

O

N

Analysis –

Logical Evaluation

DECISION BASIS

Choice

Information

Preferences

Alternatives

Models

Probability

Assignments

Value

Time & Risk

Preferences




Influence Diagrams

Influence diagrams capture the decision maker’s state of knowledge aboutthe situation.

Rectangles represent decisions (decision nodes)Ovals represent chance events (chance nodes)Rectangle with rounded corners represent consequences –mathematical calculation or a constant value (consequence orcalculation nodes)Arcs represent predecessor and successor relationships

Venture

Succeeds

or fails

Return on

InvestmentInvest?

Decision

Chance

Consequence

Figure 3.5 on page 51 (Clemens, 1997)




Influence Diagrams and Fundamental Objectives Hierarchy

Venture

Succeeds

or fails

Return on

Investment

Invest?

Objectives Hierarchy

Influence Diagram

Overall

Satisfaction

Computer

Industry Growth

Maximize overall

satisfaction

Invest in computer

industry

Return on

investment

Figure 3.6 on page 52 (Clemens, 1997)c©Jitesh H. Panchal Lecture 03 21 / 25



Decision Trees

1 Squares represent decisions to be made2 Circles represent chance events3 Ends of branches represent consequences

Invest

Venture succeeds

Venture fails

Do not invest

Large return on investment

Funds lost

Typical return earned on less

risky investment





Decision Trees and Objectives Hierarchy

Concept

SelectionSystem 2

System 3

System 1

System 4

Best System

Detection

Effectiveness

Time to

implement

Passenger

Acceptance

Cost





Comparison: Decision Trees vs. Influence Diagrams

Decision trees display considerably more information than influencediagrams.

Decision trees get messy faster.

Influence diagrams are valuable for the structuring phase of problemsolving, and for representing large problems. Decision trees display thedetails of a problem.




References

1 Keeney, R.L., Raiffa, H., “Decisions with Multiple Objectives -Preferences and Value Tradeoffs,” Cambridge University Press, 2003.

2 Clemen R.T., Making Hard Decision: An Introduction to DecisionAnalysis, Duxbury Press, 1997.

3 Howard, R. A., Decision Analysis: Practice and Promise, ManagementScience, Vol. 34, No. 6 (Jun., 1988) , pp. 679-695.

4 Keeney, R.L., Value-Focused Thinking: A Path to CreativeDecision-Making, Harvard University Press, 1992.

5 Keeney, R.L., “Creativity in Decision Making with Value-FocusedThinking,” Sloan Management Review, Vol. 35, No. 4, pp. 33-41,Summer 1994.


THANK YOU!


lecture 03 elements of a decision problem€¦ · objectives, attributes, and goals steps in...

Documents