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Handbook of Decision Analysis

Book Description

A ONE-OF-A-KIND GUIDE TO THE BEST PRACTICES IN DECISION ANALYSIS

Decision analysis provides powerful tools for addressing complex decisions that involve uncertainty and multiple objectives, yet most training materials on the subject overlook the soft skills that are essential for success in the field. This unique resource fills this gap in the decision analysis literature and features both soft personal/interpersonal skills and the hard technical skills involving mathematics and modeling.

Readers will learn how to identify and overcome the numerous challenges of decision making, choose the appropriate decision process, lead and manage teams, and create value for their organization. Performing modeling analysis, assessing risk, and implementing decisions are also addressed throughout. Additional features include:

  • Key insights gleaned from decision analysis applications and behavioral decision analysis research

  • Integrated coverage of the techniques of single- and multiple-objective decision analysis

  • Multiple qualitative and quantitative techniques presented for each key decision analysis task

  • Three substantive real-world case studies illustrating diverse strategies for dealing with the challenges of decision making

  • Extensive references for mathematical proofs and advanced topics

The Handbook of Decision Analysis is an essential reference for academics and practitioners in various fields including business, operations research, engineering, and science. The book also serves as a supplement for courses at the upper-undergraduate and graduate levels.

Table of Contents

  1. Cover
  2. Wiley Handbooks in OPERATIONS RESEARCH AND MANAGEMENT SCIENCE
  3. Title page
  4. Copyright page
  5. List of Figures
  6. List of Tables
  7. Foreword
    1. This Handbook Is Timely
    2. Decision Professionals: The Practitioner Perspective
    3. Our Profession
    4. The Biggest Challenge
  8. Preface
  9. Acknowledgments
    1. Special Acknowledgments
    2. Individual Acknowledgments
    3. Chapter Acknowledgments
    4. Handbook Chapter Reviewers
  10. About the Authors
  11. Acronyms
  12. Chapter One: Introduction to Decision Analysis
    1. 1.1 Introduction
    2. 1.2 Decision Analysis Is a Socio-Technical Process
    3. 1.3 Decision Analysis Applications
    4. 1.4 Decision Analysis Practitioners and Professionals
    5. 1.5 Handbook Overview and Illustrative Examples
    6. 1.6 Summary
    7. KEY TERMS
  13. Chapter Two: Decision-Making Challenges
    1. 2.1 Introduction
    2. 2.2 Human Decision Making
    3. 2.3 Decision-Making Challenges
    4. 2.4 Organizational Decision Processes
    5. 2.5 Credible Problem Domain Knowledge
    6. 2.6 Behavioral Decision Analysis Insights
    7. 2.7 Two Anecdotes: Long-Term Success and a Temporary Success of Supporting the Human Decision-Making Process
    8. 2.8 Setting the Human Decision-Making Context for the Illustrative Example Problems
    9. 2.9 Summary
    10. KEY TERMS
  14. Chapter Three: Foundations of Decision Analysis
    1. 3.1 Introduction
    2. 3.2 Brief History of the Foundations of Decision Analysis
    3. 3.3 Five Rules: Theoretical Foundation of Decision Analysis
    4. 3.4 Scope of Decision Analysis
    5. 3.5 Taxonomy of Decision Analysis Practice
    6. 3.6 Value-Focused Thinking
    7. 3.7 Summary
    8. KEY TERMS
    9. ACKNOWLEDGMENTS
  15. Chapter Four: Decision Analysis Soft Skills
    1. 4.1 Introduction
    2. 4.2 Thinking Strategically
    3. 4.3 Leading Decision Analysis Teams
    4. 4.4 Managing Decision Analysis Projects
    5. 4.5 Researching
    6. 4.6 Interviewing Individuals
    7. 4.7 Conducting Surveys
    8. 4.8 Facilitating Groups
    9. 4.9 Aggregating across Experts
    10. 4.10 Communicating Analysis Insights
    11. 4.11 Summary
    12. KEY TERMS
  16. Chapter Five: Use the Appropriate Decision Process
    1. 5.1 Introduction
    2. 5.2 What Is a Good Decision?
    3. 5.3 Selecting the Appropriate Decision Process
    4. 5.4 Decision Processes in Illustrative Examples
    5. 5.5 Organizational Decision Quality
    6. 5.6 Decision Maker’s Bill of Rights
    7. 5.7 Summary
    8. KEY TERMS
  17. Chapter Six: Frame the Decision Opportunity
    1. 6.1 Introduction
    2. 6.2 Declaring a Decision
    3. 6.3 What Is a Good Decision Frame?
    4. 6.4 Achieving a Good Decision Frame
    5. 6.5 Framing the Decision Opportunities for the Illustrative Examples
    6. 6.6 Summary
    7. KEY TERMS
  18. Chapter Seven: Craft the Decision Objectives and Value Measures
    1. 7.1 Introduction
    2. 7.2 Shareholder and Stakeholder Value
    3. 7.3 Challenges in Identifying Objectives
    4. 7.4 Identifying the Decision Objectives
    5. 7.5 The Financial or Cost Objective
    6. 7.6 Developing Value Measures
    7. 7.7 Structuring Multiple Objectives
    8. 7.8 Illustrative Examples
    9. 7.9 Summary
    10. KEY TERMS
  19. Chapter Eight: Design Creative Alternatives
    1. 8.1 Introduction
    2. 8.2 Characteristics of a Good Set of Alternatives
    3. 8.3 Obstacles to Creating a Good Set of Alternatives
    4. 8.4 The Expansive Phase of Creating Alternatives
    5. 8.5 The Reductive Phase of Creating Alternatives
    6. 8.6 Improving the Set of Alternatives
    7. 8.7 Illustrative Examples
    8. 8.8 Summary
    9. KEY WORDS
  20. Chapter Nine: Perform Deterministic Analysis and Develop Insights
    1. 9.1 Introduction
    2. 9.2 Planning the Model: Influence Diagrams
    3. 9.3 Spreadsheet Software as the Modeling Platform
    4. 9.4 Guidelines for Building a Spreadsheet Decision Model
    5. 9.5 Organization of a Spreadsheet Decision Model
    6. 9.6 Spreadsheet Model for the RNAS Illustrative Example
    7. 9.7 Debugging the Model
    8. 9.8 Deterministic Analysis
    9. 9.9 Deterministic Modeling Using Monetary Multidimensional Value Functions (Approach 1B)
    10. 9.10 Deterministic Modeling Using Nonmonetary Multidimensional Value Functions (Approach 1A)
    11. 9.11 Illustrative Examples
    12. 9.12 Summary
    13. KEY TERMS
  21. Chapter Ten: Quantify Uncertainty
    1. 10.1 Introduction
    2. 10.2 Structure the Problem in an Influence Diagram
    3. 10.3 Elicit and Document Assessments
    4. 10.4 Illustrative Examples
    5. 10.5 Summary
    6. KEY TERMS
  22. Chapter Eleven: Perform Probabilistic Analysis and Identify Insights
    1. 11.1 Introduction
    2. 11.2 Exploration of Uncertainty: Decision Trees and Simulation
    3. 11.3 The Value Dialogue
    4. 11.4 Risk Attitude
    5. 11.5 Illustrative Examples
    6. 11.6 Summary
    7. KEY TERMS
  23. Chapter Twelve: Portfolio Resource Allocation
    1. 12.1 Introduction to Portfolio Decision Analysis
    2. 12.2 Socio-Technical Challenges with Portfolio Decision Analysis
    3. 12.3 Single Objective Portfolio Analysis with Resource Constraints
    4. 12.4 Multiobjective Portfolio Analysis with Resource Constraints
    5. 12.5 Summary
    6. KEY TERMS
  24. Chapter Thirteen: Communicating with Decision Makers and Stakeholders
    1. 13.1 Introduction
    2. 13.2 Determining Communication Objectives
    3. 13.3 Communicating with Senior Leaders
    4. 13.4 Communicating Decision Analysis Results
    5. 13.5 Communicating Insights in the Illustrative Examples
    6. 13.6 Summary
    7. KEY TERMS
  25. Chapter Fourteen: Enable Decision Implementation
    1. 14.1 Introduction
    2. 14.2 Barriers to Involving Decision Implementers
    3. 14.3 Involving Decision Implementers in the Decision Process
    4. 14.4 Using Decision Analysis for Decision and Strategy Implementation
    5. 14.5 Illustrative Examples
    6. 14.6 Summary
    7. KEY TERM
  26. Chapter Fifteen: Summary of Major Themes
    1. 15.1 Overview
    2. 15.2 Decision Analysis Helps Answer Important Decision-Making Questions
    3. 15.3 The Purpose of Decision Analysis Is to Create Value for Shareholders and Stakeholders
    4. 15.4 Decision Analysis Is a Socio-Technical Process
    5. 15.5 Decision Analysts Need Decision-Making Knowledge and Soft Skills
    6. 15.6 The Decision Analysis Process Must Be Tailored to the Decision and the Organization
    7. 15.7 Decision Analysis Offers Powerful Analytic Tools to Support Decision Making
    8. 15.8 Conclusion
  27. Appendix A Probability Theory
    1. A.1 Introduction
    2. A.2 Distinctions and the Clarity Test
    3. A.3 Possibility Tree Representation of a Distinction
    4. A.4 Probability as an Expression of Degree of Belief
    5. A.5 Inferential Notation
    6. A.6 Multiple Distinctions
    7. A.7 Joint, Conditional, and Marginal Probabilities
    8. A.8 Calculating Joint Probabilities
    9. A.9 Dependent and Independent Probabilities
    10. A.10 Reversing Conditional Probabilities: Bayes’ Rule
    11. A.11 Probability Distributions
    12. A.12 Combining Uncertain Quantities
  28. Appendix B Influence Diagrams
    1. B.1 Introduction
    2. B.2 Influence Diagram Elements
    3. B.3 Influence Diagram Rules
    4. B.4 SUMMARY
  29. Appendix C Decision Conferencing
    1. C.1 Introduction
    2. C.2 Conference Process and Format
    3. C.3 Location, Facilities, and Equipment
    4. C.4 Use of Group Processes
    5. C.5 Advantages and Disadvantages
    6. C.6 Best Practices
    7. C.7 SUMMARY
    8. KEY TERMS
  30. Index