The MBA Program, term 2, 2001
Gra 8005 Applied Decision Analyses- Syllabus
Professor Fred Wenstøp
Phone 67 55 72 69 -conference hours by appointment
[Objective][Content][Software][Format][Literature][Grading][Schedule]
The objective of the course is to supply the participants with the skills necessary to make effective use of formal quantitative analyses. We do not aim at complete mastery of technical details, but rather at developing formal analytic processes that contribute to decision making skills. We focus on the concepts we believe are the most important for the practical analysis of management decisions. Hence, the course is not an overview of management science techniques, but rather an operationalization of fundamental principles.
We discuss the formulation of decision objectives and criteria; the development of alternative strategies; efficient use of marketing surveys and limited information; anticipating competitive reactions; and finally, rational decision making with conflicting objectives.
The course will consist of a combination of theory presentation where
the instructor plays the major role, and case discussions where the students
play the major role. It is tempting, in Management Science to focus on
the mathematical aspects of the various methods. In an MBA-program, however,
it is both more relevant and more challenging to discuss their practical
applicability. Seemingly, simple methods can become quite sophisticated
and useful tools when one is tackling real life problems. We will therefore
spend at least the same amount of time on case discussions as on the theory.
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To use appropriate software is a basic skill for the manager of today. Spreadsheet and statistical analysis packages should therefore be used when it facilitates analysis of the cases. It is not an objective in itself, however, to learn how to use software.
There are several cases. The members of each group work together on the cases and hand in a group solution outline before the case is presented in class. The hand-in should be 2-3 pages and show the rudiments of the assumptions, reasoning and calculations leading to the recommended solution. In most cases, one of the groups will have been appointed to present the case in class, propose a solution, and invite to discussion. The group members organize the presentation among themselves, but each member should participate one way or the other as far as this is practical.
A class meeting normally starts with the instructor introducing the
theory that will be relevant for the case to be presented at the next meeting.
After this, the appointed group presents the case relating to the previous
session's theory. The cases will usually not have a unique solution. This
allows for the discussion of alternative analysis methods and practical
considerations, which normally is left out in the theory. In this way,
we hope to achieve a fruitful synergy between practice and theory.
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Handouts
The handouts are partly based on Paul A. Vatter et al.: Quantitative
Methods in Management, text and cases, R.D. Irwin, Inc., Homewood, Illinois,
1978 (Out of print).
Software
We recommend Excel 5 for Windows as a general tool and host for special
applications.
Pro&Con for multi-criteria analysis
Recommended literature
P Goodwin and G Wright (1991) Decision Analysis for Management Judgment,
John Wiley
R L Keeney (1992) Value focused thinking, Harvard University
Press
The final grade is based on:
1. Wednesday, October 24, AM
Lecture: Emotional rationality. Paper.
Overheads.
Framework
for analysis of decisions under uncertainty
Recommended reading from G&W
Subjective probability, 278-279
Expected value, 89-90
Decision rules, 98-102
Decision trees, 145-152
2. Wednesday, October 31, AM
Lecture: Risk Aversion,
utility functions
Case A: Edgartown Fisheries, presentation: group
1, hand-ins: all groups
Recommended reading from G&W
Limitation of EMV, 102-104
Utility theory, 104-125
Decision tree and utility, 152-154
3. Wednesday, November 07, AM
Lecture: Information, probability
distributions
Case B: Waterman Engineering Corp., presentation:
group 2, hand-ins: all groups
Recommended reading from G&W
Probability distributions, 85-89
The value of information, ch. 8
4. Wednesday, November 14, AM
Lecture: Regression Analysis.
The lecture is based on Excel data.
Case C: Monitor Systems, presentation: group 3,
hand-ins: all groups
Recommended reading
Any basic text on statistics that include
multiple regression analysis
5. Wednesday, November 21, AM
Quiz, one hour. (An example of a previous
quiz can be downloaded.)
Lecture: Simulation as a tool
for decision support. The case solution may be based on a prepared
simulation
model.
Lectured case: The HIV epidemic in New York
Recommended reading from G&W
Simulation, ch. 7
6. Wednesday, November 28, AM
Lecture: Games and competitive
reactions
Case D: Korvettes department stores, presentation:
group 4, hand-ins: all groups
Case E: Great Western Steel Corp., presentation:
group 5, hand-ins: all groups
7. Wednesday, December 05, AM
Lectured case: Value based
HIV policy in Norway
Lecture: Value
focused thinking
Case F: Classic Greek Explosives, presentation:
group 6, hand-ins: all groups
8. Wednesday, December 12, AM
Lecture: Multi Criteria
Decision-making
Value focused decision analysis case: All groups
present a decision analysis framework proposal
(decision context and evaluation criteria)
9. Wednesday, December 19, AM
Value focused decision analysis case, presentation:
all groups, hand-ins: all groups