Multi-objective Decision Analysis

Key Points

• Many practical decisions have a small set of discrete alternatives. However, there are other types of decisions in which the number of alternatives is practically infinite. For these types of decisions, it is important to consider placing limits, or lower and upper bounds, on the amount of the scarce resource that can be allocated to each of the “buckets.” Microsoft Solver, or another optimization tool, can be used to identify the allocation (i.e., alternative) with the highest overall weighted value or utility.

• Some decisions involve evaluation measures with interdependent probabilities. When evaluation measure probabilities are interdependent, an alternative’s overall certainty equivalent value will not necessarily equal the ...