The Decision Basis
Structuring Objectives
Structuring Decisions
Lecture 03
Elements 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, IN
http://engineering.purdue.edu/delp
September 2, 2014
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The Decision Basis
Structuring Objectives
Structuring Decisions
Lecture Outline
1
The Decision Basis
Decision Basis and Structure
Objectives, Attributes, and Goals
2
Structuring Objectives
Hierarchical Nature of Objectives
Fundamental vs. Means Objectives
Desirable Properties of Sets of Objectives
Attributes
3
Structuring Decisions
Influence Diagrams
Decision Trees
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The Decision Basis
Structuring Objectives
Structuring Decisions
Decision Basis and Structure
Objectives, Attributes, and Goals
The Structure of a Design Decision
p11
A1
p1k
p21
Decision
A2
p1k
pn1
An
pnk
Alternatives
O11
U(O11)
O12
U(O12)
O1k
U(O1k)
O21
U(O21)
O22
U(O22)
O2k
U(O2k)
On1
U(On1)
On2
U(On2)
Onk
U(Onk)
Outcomes
Preferences
Select Ai
Choice
Slide courtesy: Chris Paredis
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The Decision Basis
Structuring Objectives
Structuring Decisions
Decision Basis and Structure
Objectives, Attributes, and Goals
Alternative-Focused vs. Value Focused Decision Making
Limitations of alternative-focused approaches:
1
Simply choosing readily available alternatives
2
No attention on the interaction between values and the creation of
alternatives
3
All effort reserved for partial evaluation of given alternatives
4
Criteria do not reflect fundamental objectives, but rather proxies
5
Achievement of different objectives is not systematically integrated
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The Decision Basis
Structuring Objectives
Structuring Decisions
Decision Basis and Structure
Objectives, Attributes, and Goals
The Decision Basis: A Formal Representation of the Problem
DECISION BASIS
Choice
Alternatives
P
R
O
B
L
E
M
Information
Models
Synthesis - Elicitation
Probability
Assignments
Analysis –
Logical Evaluation
Preferences
D
E
C
I
S
I
O
N
Value
Time & Risk
Preferences
Howard, R. A., Decision Analysis: Practice and Promise, Management Science, Vol. 34, No. 6 (Jun., 1988) , pp. 679-695
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The Decision Basis
Structuring Objectives
Structuring Decisions
Decision Basis and Structure
Objectives, Attributes, and Goals
Steps in Modeling a Design Decision
1
Identify the decision situation
2
Determine the objectives
3
Choose the attributes
4
Identify design alternatives and design variables
5
Model the decision structure with an influence diagram or a decision tree
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The Decision Basis
Structuring Objectives
Structuring Decisions
Decision Basis and Structure
Objectives, Attributes, and Goals
Terminology
Objective: An objective is a specific thing that you want to achieve. An
objective indicates the “direction” in which we should do better, e.g.,
minimize weight.
Values: An individual’s objectives taken together make up his/her
values. Values of the decision makers are made explicit with objectives.
Goal: A goal is different from an objective in that it is either achieved or
not. Goals are useful for clearly identifying a level of achievement to
strive toward, e.g., weight should be less than 100 kg.
Attribute: provides a scale for measuring the degree to which its
respective objective is met.
After identifying attributes, we need preferences towards them, and
uncertainty in achieving them. (Focus of future lectures)
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The Decision Basis
Structuring Objectives
Structuring Decisions
Fundamental vs. Means Objectives
Desirable Properties of Sets of Objectives
Attributes
Fundamental vs. Means Objectives
Fundamental objectives
Represent 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 tree
There should be no overlap between different branches of the tree
Means objectives
Help to achieve fundamental objectives (be careful! often dependent on
system alternative)
Important only because of its implications for some other objective
Organized into a network of objectives
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The Decision Basis
Structuring Objectives
Structuring Decisions
Fundamental vs. Means Objectives
Desirable Properties of Sets of Objectives
Attributes
Fundamental Objectives Hierarchy: Example
Maximize
Safety
Minimize
Loss of Life
Minimize
Serious Injuries
Adults
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Children
Lecture 03
Minimize
Minor Injuries
Adults
Children
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The Decision Basis
Structuring Objectives
Structuring Decisions
Fundamental vs. Means Objectives
Desirable Properties of Sets of Objectives
Attributes
Determining Whether An Objective is Fundamental or Means
Separate means and fundamental objectives by asking “Why is that
Important?” (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 through
major cities, exposing more people to the hazardous material, and this
may 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 fatalities
and 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 hazardous
material”
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, Summer
1994.
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The Decision Basis
Structuring Objectives
Structuring Decisions
Fundamental vs. Means Objectives
Desirable Properties of Sets of Objectives
Attributes
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 the
decision problem and for assessing an objective function appropriate for
the problem.
Keeney, R.L., Value-Focused Thinking: A Path to Creative Decision-Making, Harvard University Press, 1992.
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The Decision Basis
Structuring Objectives
Structuring Decisions
Fundamental vs. Means Objectives
Desirable Properties of Sets of Objectives
Attributes
Another Example of an Objectives Hierarchy
Evaluating passenger transport facilities
Figure 2.2, Page 42 (Keeney and Raiffa, 2003)
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The Decision Basis
Structuring Objectives
Structuring Decisions
Fundamental vs. Means Objectives
Desirable Properties of Sets of Objectives
Attributes
Desirable Properties of Fundamental Objectives
1
Essential, to indicate consequences in terms of fundamental reasons for
interest in the decision situation.
2
Controllable, to address consequences that are influenced only by the
choice of alternatives in the decision context.
3
Complete, to include all fundamental aspects of the consequences of the
decision alternatives.
4
Measurable, to define the objectives precisely and to specify the degrees
to which objectives may be achieved.
Keeney, R.L., Value-Focused Thinking: A Path to Creative Decision-Making, Harvard University Press, 1992.
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The Decision Basis
Structuring Objectives
Structuring Decisions
Fundamental vs. Means Objectives
Desirable Properties of Sets of Objectives
Attributes
Desirable Properties of Fundamental Objectives (contd.)
5
Operational, to render the collection of information required for an
analysis reasonable considering the time and effort available.
6
Decomposable, to allow the separate treatment of different objectives in
the 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
decision
9
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.
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The Decision Basis
Structuring Objectives
Structuring Decisions
Fundamental vs. Means Objectives
Desirable Properties of Sets of Objectives
Attributes
Means Objective Network: Example
Means Objectives help to achieve fundamental objectives.
Maximize
Safety
Maximize use of
vehicle-safety features
Motivate purchase
of safety features
on vehicles
Require safety
features
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Educate public
about safety
Minimize
accidents
Maximize
driving quality
Maintain
vehicles
properly
Enforce traffic
laws
Have reasonable
traffic laws
Lecture 03
Minimize driving
under influence
of alcohol
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The Decision Basis
Structuring Objectives
Structuring Decisions
Fundamental vs. Means Objectives
Desirable Properties of Sets of Objectives
Attributes
How to construct mean-objective networks and fundamental-objectives
hierarchies?
1
Fundamental Objectives
To move downward in the hierarchy: “What do you mean by that?”
To move upward in the hierarchy: “Of what more general objective is this an
aspect?”
2
Means Objectives
To move away from fundamental objectives: “How could you achieve this?”
To move toward fundamental objectives: “How is that important?” (WITI)
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The Decision Basis
Structuring Objectives
Structuring Decisions
Fundamental vs. Means Objectives
Desirable Properties of Sets of Objectives
Attributes
Relating Fundamental and Means Objectives
Summer intern decision
Figure 3.4 on page 48 (Clemen, 1997)
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The Decision Basis
Structuring Objectives
Structuring Decisions
Fundamental vs. Means Objectives
Desirable Properties of Sets of Objectives
Attributes
Nature of Attributes
Attributes provide a scale for measuring the degree to which its respective
objective is met. Attributes should be
1
Comprehensive: knowing the level of an attribute, we get a clear
understanding of the extent that the objective is achieved.
2
Measurable: we can either assign a point value, or obtain a probability
distribution (for each alternative) over the possible levels of the attribute.
AND we can assess the decision maker’s preferences for the different
levels of the attribute.
3
Relevant, and not subject to other extraneous considerations.
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The Decision Basis
Structuring Objectives
Structuring Decisions
Influence Diagrams
Decision Trees
Structuring the Decision Elements
Influence diagrams and decision trees provide two approaches for
structuring the decision elements:
1
Decisions and Alternatives
2
Uncertain Events
3
Objectives
DECISION BASIS
Choice
Alternatives
P
R
O
B
L
E
M
Information
Models
Synthesis - Elicitation
Probability
Assignments
Preferences
Analysis –
Logical Evaluation
D
E
C
I
S
I
O
N
Value
Time & Risk
Preferences
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The Decision Basis
Structuring Objectives
Structuring Decisions
Influence Diagrams
Decision Trees
Influence Diagrams
Influence diagrams capture the decision maker’s state of knowledge about
the 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 or
calculation nodes)
Arcs represent predecessor and successor relationships
Chance
Venture
Succeeds
or fails
Invest?
Return on
Investment
Decision
Consequence
Figure 3.5 on page 51 (Clemens, 1997)
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The Decision Basis
Structuring Objectives
Structuring Decisions
Influence Diagrams
Decision Trees
Influence Diagrams and Fundamental Objectives Hierarchy
Objectives Hierarchy
Maximize overall
satisfaction
Invest in computer
industry
Return on
investment
Influence Diagram
Venture
Succeeds
or fails
Invest?
Return on
Investment
Computer
Industry Growth
Overall
Satisfaction
Figure 3.6 on page 52 (Clemens, 1997)
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The Decision Basis
Structuring Objectives
Structuring Decisions
Influence Diagrams
Decision Trees
Decision Trees
1
Squares represent decisions to be made
2
Circles represent chance events
3
Ends of branches represent consequences
Venture succeeds
Large return on investment
Invest
Venture fails
Do not invest
Funds lost
Typical return earned on less
risky investment
Figure 3.21 on page 68 (Clemens, 1997)
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The Decision Basis
Structuring Objectives
Structuring Decisions
Influence Diagrams
Decision Trees
Decision Trees and Objectives Hierarchy
Best System
System 1
Concept
Selection
Detection
Effectiveness
Time to
implement
Passenger
Acceptance
Cost
System 2
System 3
System 4
Figure 3.22 on page 69 (Clemens, 1997)
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The Decision Basis
Structuring Objectives
Structuring Decisions
Influence Diagrams
Decision Trees
Comparison: Decision Trees vs. Influence Diagrams
Decision trees display considerably more information than influence
diagrams.
Decision trees get messy faster.
Influence diagrams are valuable for the structuring phase of problem
solving, and for representing large problems. Decision trees display the
details of a problem.
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The Decision Basis
Structuring Objectives
Structuring Decisions
Influence Diagrams
Decision 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 Decision
Analysis, Duxbury Press, 1997.
3
Howard, R. A., Decision Analysis: Practice and Promise, Management
Science, Vol. 34, No. 6 (Jun., 1988) , pp. 679-695.
4
Keeney, R.L., Value-Focused Thinking: A Path to Creative
Decision-Making, Harvard University Press, 1992.
5
Keeney, R.L., “Creativity in Decision Making with Value-Focused
Thinking,” Sloan Management Review, Vol. 35, No. 4, pp. 33-41,
Summer 1994.
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THANK YOU!
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