lecture 03 elements of a decision problem€¦ · objectives, attributes, and goals steps in...
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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
The Decision BasisStructuring ObjectivesStructuring Decisions
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
The Decision BasisStructuring ObjectivesStructuring Decisions
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
The Decision BasisStructuring ObjectivesStructuring Decisions
Decision Basis and StructureObjectives, Attributes, and Goals
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
c©Jitesh H. Panchal Lecture 03 4 / 25
The Decision BasisStructuring ObjectivesStructuring Decisions
Decision Basis and StructureObjectives, Attributes, and Goals
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
c©Jitesh H. Panchal Lecture 03 5 / 25
The Decision BasisStructuring ObjectivesStructuring Decisions
Decision Basis and StructureObjectives, Attributes, and Goals
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
c©Jitesh H. Panchal Lecture 03 6 / 25
The Decision BasisStructuring ObjectivesStructuring Decisions
Decision Basis and StructureObjectives, Attributes, and Goals
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)
c©Jitesh H. Panchal Lecture 03 7 / 25
The Decision BasisStructuring ObjectivesStructuring Decisions
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
c©Jitesh H. Panchal Lecture 03 8 / 25
The Decision BasisStructuring ObjectivesStructuring Decisions
Fundamental vs. Means ObjectivesDesirable Properties of Sets of ObjectivesAttributes
Fundamental Objectives Hierarchy: Example
Maximize
Safety
Minimize
Loss of Life
Minimize
Serious Injuries
Minimize
Minor Injuries
Adults Children Adults Children
c©Jitesh H. Panchal Lecture 03 9 / 25
The Decision BasisStructuring ObjectivesStructuring Decisions
Fundamental vs. Means ObjectivesDesirable Properties of Sets of ObjectivesAttributes
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.
c©Jitesh H. Panchal Lecture 03 10 / 25
The Decision BasisStructuring ObjectivesStructuring Decisions
Fundamental vs. Means ObjectivesDesirable Properties of Sets of ObjectivesAttributes
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.
c©Jitesh H. Panchal Lecture 03 11 / 25
The Decision BasisStructuring ObjectivesStructuring Decisions
Fundamental vs. Means ObjectivesDesirable Properties of Sets of ObjectivesAttributes
Another Example of an Objectives Hierarchy
Evaluating passenger transport facilities
Figure 2.2, Page 42 (Keeney and Raiffa, 2003)
c©Jitesh H. Panchal Lecture 03 12 / 25
The Decision BasisStructuring ObjectivesStructuring Decisions
Fundamental vs. Means ObjectivesDesirable Properties of Sets of ObjectivesAttributes
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.
Keeney, R.L., Value-Focused Thinking: A Path to Creative Decision-Making, Harvard University Press, 1992.
c©Jitesh H. Panchal Lecture 03 13 / 25
The Decision BasisStructuring ObjectivesStructuring Decisions
Fundamental vs. Means ObjectivesDesirable Properties of Sets of ObjectivesAttributes
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.
Keeney, R.L., Value-Focused Thinking: A Path to Creative Decision-Making, Harvard University Press, 1992.
c©Jitesh H. Panchal Lecture 03 14 / 25
The Decision BasisStructuring ObjectivesStructuring Decisions
Fundamental vs. Means ObjectivesDesirable Properties of Sets of ObjectivesAttributes
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
c©Jitesh H. Panchal Lecture 03 15 / 25
The Decision BasisStructuring ObjectivesStructuring Decisions
Fundamental vs. Means ObjectivesDesirable Properties of Sets of ObjectivesAttributes
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)
c©Jitesh H. Panchal Lecture 03 16 / 25
The Decision BasisStructuring ObjectivesStructuring Decisions
Fundamental vs. Means ObjectivesDesirable Properties of Sets of ObjectivesAttributes
Relating Fundamental and Means Objectives
Summer intern decision
Figure 3.4 on page 48 (Clemen, 1997)
c©Jitesh H. Panchal Lecture 03 17 / 25
The Decision BasisStructuring ObjectivesStructuring Decisions
Fundamental vs. Means ObjectivesDesirable Properties of Sets of ObjectivesAttributes
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.
c©Jitesh H. Panchal Lecture 03 18 / 25
The Decision BasisStructuring ObjectivesStructuring Decisions
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
c©Jitesh H. Panchal Lecture 03 19 / 25
The Decision BasisStructuring ObjectivesStructuring Decisions
Influence DiagramsDecision Trees
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)
c©Jitesh H. Panchal Lecture 03 20 / 25
The Decision BasisStructuring ObjectivesStructuring Decisions
Influence DiagramsDecision Trees
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
The Decision BasisStructuring ObjectivesStructuring Decisions
Influence DiagramsDecision Trees
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
Figure 3.21 on page 68 (Clemens, 1997)
c©Jitesh H. Panchal Lecture 03 22 / 25
The Decision BasisStructuring ObjectivesStructuring Decisions
Influence DiagramsDecision Trees
Decision Trees and Objectives Hierarchy
Concept
SelectionSystem 2
System 3
System 1
System 4
Best System
Detection
Effectiveness
Time to
implement
Passenger
Acceptance
Cost
Figure 3.22 on page 69 (Clemens, 1997)
c©Jitesh H. Panchal Lecture 03 23 / 25
The Decision BasisStructuring ObjectivesStructuring Decisions
Influence DiagramsDecision Trees
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.
c©Jitesh H. Panchal Lecture 03 24 / 25
The Decision BasisStructuring ObjectivesStructuring Decisions
Influence DiagramsDecision Trees
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.
c©Jitesh H. Panchal Lecture 03 25 / 25
THANK YOU!
c©Jitesh H. Panchal Lecture 03 1 / 1