IE 560 Engineering Risk Analysis
HW3
Due Tuesday, Sept. 29
1: Basic inuence diagram
You are facing a decision with two alternatives: A and B. If you choose A, there is a 10% chance of
gaining $20, a 20% chance of gaining $10, a 60% chance of gaining $0, a

Risk Management
coincides with parts of Bedford and Cooke,
Ch 13 and 18
IE 560X Engineering Risk Analysis
Fall 2015
Cameron MacKenzie
IE 560X ENGINEERING RISK ANALYSIS
1
Defining risk analysis
Risk analysis is generally a function of two
activities
Risk
a

SUBJECTIVE PROBABILITY
Corresponds with Hubbard, Ch 6 and 10
IE 560X Engineering Risk Analysis
Fall 2015
Cameron MacKenzie
IE 560X ENGINEERING RISK ANALYSIS
1
Uncertainty
Lack certainty about the true state of the
system
Where does uncertainty come from

FAULT TREES
coincides with parts of Bedford and Cooke,
Ch 6
IE 560X Engineering Risk Analysis
Fall 2015
Cameron MacKenzie
IE 560X ENGINEERING RISK ANALYSIS
1
Example (problem statement)
A pump system depends on a single power
supply and three pumps (one p

IE 560 Engineering Risk Analysis
HW1
Due Thursday, Aug. 27
This is a required homework, but it will not be graded. In addition to answering the four questions
below, please also write:
1. Your name
2. Your degree program
3. The last year you took a course

IE 560 Engineering Risk Analysis
HW4
Due Tuesday, Oct. 13
1: Boolean algebra
(1) Using Boolean algebra, simplify (A + B) (A + C) so that it is equivalent to two cut sets.
(2) Consider the following fault tree. Determine which component A, B, C, or D is no

IE 560 Engineering Risk Analysis
HW5
Due Thursday, Dec. 3
1: Probability assessment
This question will give you practice soliciting probabilities from another individual. Ask an individual if you can elicit probabilities from that individual. The only req

IE 560 Engineering Risk. Analysis HW2
Due Thursday, Sept. 10
‘1: AIDS case study
This question comes from Clemen and Reilly, Making Hard Decisions Mason: OH: South Western
Cengage Learning, 2001, pages 289—292. It will be eaSiest to use Excel or ano

IE 560 Engineering Risk Analysis
Case Study
Due November 5-7
In lieu of having a formal exam, IE 560X will have a case study to be analyzed among groups. Your
assignment is to analyze the risk of a propellant leak in an unmanned spacecraft and present you

SUBJECTIVE PROBABILITY
Corresponds with Hubbard, Ch 6 and 10
IE 560X Engineering Risk Analysis
Fall 2015
Cameron MacKenzie
IE 560X ENGINEERING RISK ANALYSIS
1
Uncertainty
Lack certainty about the true state of the
system
Where

RISK PERCEPTION
coincides with parts of Bedford and Cooke,
Ch 18
IE 560X Engineering Risk Analysis
Fall 2015
Cameron MacKenzie
IE 560X ENGINEERING RISK ANALYSIS
1
Objective or subjective risk?
IE 560X ENGINEERING RISK ANALYSIS
2
Rank the following risks
C

INTELLIGENT ADVERSARY
IE 560X Engineering Risk Analysis
Fall 2015
Cameron MacKenzie
IE 560X ENGINEERING RISK ANALYSIS
1
Decision question
P(apprehension with
two guards) = 1.0
P(apprehension with
one guard) = 0.5
P(apprehension with
zero guards) = 0.0
Uti

RISK COMMUNICATION
IE 560X Engineering Risk Analysis
Fall 2015
Cameron MacKenzie
IE 560X ENGINEERING RISK ANALYSIS
1
Know your audience
Advice and answers
Numbers
Process and framing
IE 560X ENGINEERING RISK ANALYSIS
2
Audience
To whom are you present

Risk Analysis, Vol. I , No. I , 1981
On The Quantitative Definition of Risk
Stanley Kaplan and B. John Garrick2
Received July 14, 1980
A quantitative definition of risk is suggested in terms of the idea of a set of triplets. The
definition is extended to

SUBJECTIVE PROBABILITY
Part 2
Corresponds with Hubbard, Ch 6 and 10
IE 560X Engineering Risk Analysis
Fall 2015
Cameron MacKenzie
IE 560X ENGINEERING RISK ANALYSIS
1
Challenges with subjective probability
Heuristics and biases
Representativeness
Availa

Decision Theory
coincides with parts of Bedford and Cooke,
Ch 10
IE 560X Engineering Risk Analysis
Fall 2015
Cameron MacKenzie
IE 560X ENGINEERING RISK ANALYSIS
1
Motivation
IE 560X ENGINEERING RISK ANALYSIS
2
Uncertain investment
Imagine you are offered

IE 560 Engineering Risk Analysis Class examples
1: DA Corp
DA Corp. would like to invest in research on a new drug, Clear Voyance. Clear Voyance would
instantly and painlessly cure any eyesight problem. DA Corp. presently has cash and assets worth
$49 mil

5%
1. Martin Luther King Jr.s age when he
died
2. Length of the Nile River
3. Number of countries that are members
of OPEC
4. Diameter of the moon
5. Weight of an empty Boeing 747
6. Year Wolfgang Mozart was born
7. Population of Fiji
8. Air distance from

INFLUENCE DIAGRAMS
coincides with parts of Bedford and Cooke,
Ch 14
IE 560X Engineering Risk Analysis
Fall 2015
Cameron MacKenzie
IE 560X ENGINEERING RISK ANALYSIS
1
Influence diagrams
Graphical representation of problem with
uncertainty
Also known as
B

INTRODUCTION TO RELIABILITY
coincides with parts of Bedford and Cooke,
Ch 3
IE 560X Engineering Risk Analysis
Fall 2015
Cameron MacKenzie
IE 560X ENGINEERING RISK ANALYSIS
1
Reliability
An applied probability area that often deals directly
with risk anal

EVENT TREES
IE 560X Engineering Risk Analysis
Fall 2015
Cameron MacKenzie
IE 560X ENGINEERING RISK ANALYSIS
1
Event trees
Probability tree
Usually used to analyze accident scenarios
Sequence of events from hazardous or initiating
event to an end event w

IE 560 Engineering Risk Analysis Class examples
1: Pump system
A pump system depends on a single power supply and three pumps (one powerful pump and two
less powerful pumps). The system functions normally using the power supply and the powerful
pump. If t

IE 560 Engineering Risk Analysis Class examples
1: Stock returns
The daily return for a stock during the past 30 years averages 1% with a standard deviation of 2%.
During the past 30 years, the daily return has been -10% once and -10.1% once. Based on thi

IE 560 Engineering Risk Analysis Class examples
1: English
Which is more likely in English, a word beginning with the letter r or a word with the letter r
in the 3rd position?
2: Stephanie
Stephanie is 31 years old, single, outspoken, and very bright. She

IE 560 Engineering Risk Analysis Class examples
1: Defective manufacturing chips
A manufacturing process produces computer chips of which 6% are defective. This defective rate
is found using a thorough and expensive test on a small random sample of chips.