©chelst & canbolat value-added decision making chapter 3 common decision templates: influence...

©Chelst & Canbolat Value-Added Decision Making

Chapter 3 Common Decision Templates: Influence Diagrams

Efficient construction of influence diagramsLearn by example

9/19/2011 1

©Chelst & Canbolat Value-Added Decision Making9/19/201

12

Decision Templates-Topic: Context

1. 1n-house or outsource: make or buy (a) simple and (b) strategic

2. Change or keep status quo: (a) upgrade and (b) late design change

3. Products: (a) launch and (b) portfolio

4. Project management: product development tasks

5. Capacity planning: (a) basic and (b) flexible

6. Technology choice: (a) large scale and (b) personal

7. Personnel or organization selection: hire research faculty

8. Facility location: sports arena

9. Bidding: make offer

10. Personal decision: University

11. Information gathering decisions: market research, medical tests, prototypes, and pilot plants


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Figure 3.1 – Make or Buy Decision – Minimize Cost

Demand

Wage Inflation

Currency Fluctuation

Make or Buy

Fixed Cost

Variable Cost Total Cost or

ROI

Productivity

Communication & Oversight

Logistics


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Figure 3.2 – Make or Buy Decision – Multiple Objectives

Demand

Wage Inflation

Currency Fluctuation

Make or Buy

Investment Cost

Variable Cost

Productivity

Communication & Oversight

Logistics

Worker turnover

Quality

Strategic value

Responsiveness

Total Cost

Design changes

Competitor Actions

Total Value


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Figure 3.3 – Corporate Software Upgrade

Upgrade Now

Performance Enhancement

Purchase Cost

Immediate & Long-term

Value

Next Upgrade Performance

and Cost

Next Upgrade Launch Date

Corporate Training

IT Team Workload

Changeover & Compatibility

Issues

Support Old Version

User Training

User Hassle

Total Cost

IT System Impact


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Figure 3.4 – Late Design Change

Lost Production

Make Late Design Change

Solve Quality Problems

Implementation Time

Manufacturing Cost

Performance

Total Quality

Create Quality Problems Sales

Total Profit


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Figure 3.5 – Launch Product

Initial Competitor

Actions

Initial Demand

Continuing Operational & Support Costs

Total Profit

Long-term Price

Introduce Product or Service at Price with

Launch Budget

Quality Issues

Long-term Demand

On-going Marketing

Budget

Economy

Competitor Strategy


1

Figure 3.6 - Product Portfolio: Two Classes

Product Portfolio

Demand (Luxury)

Cannibalization Effect

Price Points

Product Characteristics

Demand (Standard)

Total Profit


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Figure 3.7 - Project Management: Product Development

Task Execution Strategy

Manufacturing Feasibility

Overlapping Magnitude

Initial Magnitude of Design

InfeasibilityNumber of

Design Iterations

Information Accumulated

Additional Resources

Final Design

Timing

Cost

Performance

Total Value


1

Figure 3.8 –Capacity Planning

Competitor Actions

Short Term Demand

How Much Capacity

Long-term Demand

Economy & Growth

Actual Yield

Company Market Share

Total Cost

Annual Sales

Technological Advances

Total Profit

Productivity Gains


1

Figure 3.9 – Capacity Planning with Flexibility

Competitor Actions Short Term

Demand

How Much Capacity

Long-term Demand

Economy & Growth

Actual Yield

Company Market Share

Total Cost

Annual Sales

Technological Advances

Total Profit

Productivity Gains

Changing Product Mix

Product Flexible Capacity Upgradable

Capacity


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Figure 3.10 – Technology Selection – Large Scale

Technology Choice

Performance

Purchase Cost

Total Value

Training

Total Cost

System Impact

Integration Cost

Support Services

Operating Cost

Problems

Energy Prices

Environmental Impact

Timing


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Figure 3.11 – Detection Technology – Performance Objectives

Performance

False Negatives

False Positives

System Sensitivity

Speed of Processing

Deterrent Affect

Discover Weapons

Discover Range of Explosives

Personal Intrusiveness

Risk of Terrorist Boarding Plane

Passenger Acceptance


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Figure 3.12 – Technology Selection – Personal

User Hassle

Technology Choice

Performance

Purchase Cost

Total Value

Training

Total Cost

Operating Cost

Energy Prices

Support Services

Problems


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Figure 3.13 – Hire Research Faculty Member

Design Course

Select Faculty

Research Area

Fundable

Independent Research

Teaching

Research Funding

Publications

Relates to Students

Grant writing

Collaborative Ability

Strategic Value

Specialty

Supervise Research

Prestige of Education

Invite On Site

Research Lecture

Interview

To Each Objective

Recommendations


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Figure 3.14: Locate Sports Arena

Opposition Groups

Locate Arena

Land Acquisition

Environmental Impact Study

Neighborhood Development

Timing

Total Value

Ease of Access

Cost

Local Community

Support

Neighborhood Change


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Figure 3.15: Simple Bid

How Much To Bid

Profit

Win Bid

Competitor Bids

Cost

Value


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Figure 3.16 – Large Scale Bid with Multiple Decisions

How Much To Bid

Profit

Win Bid

Competitor Bids

Cost

Partner

Value

Information

Timing

Seller’s Response

Financing Strategy

Bid Package

Economy

Local Instability


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Figure 3.17 - University Selection


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Figure 3.18 – Gather Imperfect Information

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