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Ch03_17-42

# Ch03_17-42 - 72106 CH03 GGS 2:03 PM Page 17 C H A P T E R...

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17 T EACHING S UGGESTIONS Teaching Suggestion 3.1: Using the Steps of the Decision-Making Process. The six steps used in decision theory are discussed in this chapter. Students can be asked to describe a decision they made in the last semester, such as buying a car or selecting an apartment, and de- scribe the steps that they took. This will help in getting stu- dents involved in decision theory. It will also help them realize how this material can be useful to them in making important per- sonal decisions. Teaching Suggestion 3.2: Importance of Defining the Problem and Listing All Possible Alternatives. Clearly defining the problem and listing the possible alternatives can be difficult. Students can be asked to do this for a typical decision- making problem, such as constructing a new manufacturing plant. Role-playing can be used to make this exercise more interesting. Many students get too involved in the mathematical ap- proaches and do not pay enough attention to the importance of carefully defining the problem and considering all possible alter- natives. These initial steps are important. Students need to realize that if they do not carefully define the problem and list all alterna- tives, most likely their analyses will be wrong. Teaching Suggestion 3.3: Categorizing Decision-Making Types. Decision-making types are discussed in this chapter; decision making under certainty, risk, and uncertainty are included. Stu- dents can be asked to describe an important decision they had to make in the past year and categorize the decision type. A good ex- ample can be a financial investment of \$1,000. In-class discussion can help students realize the importance of decision theory and its potential use. Teaching Suggestion 3.4: Starting the EVPI Concept. The material on the expected value of perfect information (EVPI) can be started with a discussion of how to place a value on infor- mation and whether or not new information should be acquired. The use of EVPI to place an upper limit on what you should pay for information is a good way to start the section on this topic. Teaching Suggestion 3.5: Starting the Decision-Making Under Uncertainty Material. The section on decision-making under uncertainty can be started with a discussion of optimistic versus pessimistic decision makers. Students can be shown how maximax is an optimistic approach, while maximin is a pessimistic decision technique. While few peo- ple use these techniques to solve real problems, the concepts and general approaches are useful. Teaching Suggestion 3.6: Decision Theory and Life-Time Decisions. This chapter investigates large and complex decisions. During one’s life, there are a few very important decisions that have a major impact. Some call these “life-time decisions.” Students can be asked to carefully consider these life-time decisions and how decision theory can be used to assist them. Life-time decisions in- clude decisions about what school to attend, marriage, and the first job.

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