Problem_Session_1

Problem_Session_1 - MS&E 252 Decision Analysis I...

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Problem Session 1 MS&E 252 Decision Analysis I MS&E 252 Decision Analysis I Problem Session 1
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Problem Session 1 MS&E 252 Decision Analysis I Contacting me Ibrahim Al Mojel mojel@stanford.edu Office hours: Mon, 5:45pm – 6:45pm Tue, 3pm – 4pm Terman 406A
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Problem Session 1 MS&E 252 Decision Analysis I Announcements Grading policy Participation used to determine borderline grades Participation in TA session/Coursework Probabilistic grading covered later If additional questions, email own TA Office hours posted on web
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Problem Session 1 MS&E 252 Decision Analysis I What we will cover today: Introduction to Decision Analysis Types of decision problems covered in DA1 Socratic method of teaching HW Logistics and Probabilistic questions Decision Education Foundation Habit 1: Being Proactive (7 habits)
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Problem Session 1 MS&E 252 Decision Analysis I Making a Decision We all make decisions. Everyday… … Some of them are trivial, and some are really important… … Some of them are simple, and some are really complex. Decision Analysis is a coherent, logical approach to decision-making.
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Problem Session 1 MS&E 252 Decision Analysis I Decision Analysis is being applied professionally in industries like oil and gas, power generation and distribution, automobile manufacturing, insurance but also in financial institutions and complex medical decisions.
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Problem Session 1 MS&E 252 Decision Analysis I What Makes a Decision Hard? Uncertainty Lack of Alternatives Unclear Preferences Non Monetary Values Time pressure Etc… What will happen if I choose A? Is my choice really limited to A and B? Do I prefer a sure $100 or a 50-50 shot at $250 vs. nothing? How will my company’s reputation be affected? The boss said he needs my conclusions by Monday!
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Problem Session 1 MS&E 252 Decision Analysis I Decisions vs. Outcomes One of the most important distinctions in DA: Not what people normally think! “If it turned out bad, it must have been a bad decision.” “He missed the field goal; it was obviously the wrong choice.” “I drove drunk and made it home safely. What’s so bad about that?” Well, anything could’ve happened. The real question is: what were the chances of each outcome? The quality of a decision is determined when making a decision (hence before the outcome)
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Problem Session 1 MS&E 252 Decision Analysis I What Determines a Good Decision? ...but good decisions can  have bad outcomes Driving sober and getting into an accident Driving sober and arriving safely Driving drunk and arriving safely Driving drunk and getting into an accident Quality of Outcome Bad Good Good Bad Quality of Decision Good decisions  lead to a better  chance of  achieving the  better outcome…
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Problem Session 1 MS&E 252 Decision Analysis I Example: Decision Vs. Outcome Suppose you can choose between deals A and B… A die is rolled. If the side facing up is a One, you win $1000, otherwise you win nothing.
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Problem_Session_1 - MS&E 252 Decision Analysis I...

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