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Approaches to Improve Engineering Design (2001) / Chapter Skim
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3. Basic Tools for Applied Decision Theory
Pages 9-16

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From page 9...
... At that time the control and systems engineering development during World War II was available to make practical the application of fundamental ideas about decision making under uncertainty to the actual problems faced by decision makers. The new field of decision analysis provided both a formal, systematic way to analyze decisions and an important communication medium for achieving mutual understanding between decision makers and those who advise them.
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From page 10...
... These distributions will be informed by any available experimental data, but in many cases, particularly in applications of new devices or systems, the experienced judgment of 5 (fitted Dedsion beaker fiat You I Can Do ~ Frame Figure 3-1 The quality of a decision.
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From page 11...
... This dimension is essential in purely financial decisions, but it also has application in, for example, medical decisions, where the patient's quality of life must be balanced against the duration of life, and in any other decisions where the attributes of the future must be balanced against the attributes of the near term. The third dimension of preference is risk preference.
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From page 12...
... Often the successful practice of decision analysis requires a complete reframing of the originally contemplated decision. Professional decision analysts also ensure that the decision maker is actively involved in the decision-making process, to gain their commitment both to the process and to any resulting decisions.
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From page 13...
... The decision analysis cycle depicts the overall iterative nature of the formulating, analyzing, and learning process. Figure 3-5 shows a simple influence or decision diagram for a simple decision.
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From page 14...
... However, decision diagrams are more than useful graphics. When -900 -600 High Sport Segment Size in 1994 Market share O n Competition Other A Other B Unit cost Development Costs Other C Other D 5 At' Change in NPV "Right Stuff' Strategy ($ millions)
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From page 15...
... A series of tornado diagrams would show engineers at all levels of the design process the economic implications of their decisions. A useful guide in assessing decision quality is the spider diagram shown in Figure 3-8.
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Key Terms

  • decision analysis
  • decision basis
  • engineering design
  • sensitivity analysis
  • buggy whip

  • bad outcome
  • tornado diagram
  • decision diagram
  • whip production
  • probability distributions

  • value measure
  • decision diagrams
  • decision situation
  • decision quality
  • appropriate frame

  • cognitive biases
  • analyze decisions
  • decision analysts
  • logic acting
  • formally specified

  • maker prefers
  • fundamental decisions
  • maker represents
  • systematically correct
  • creative alternatives

  • analysis provided
  • model creative
  • outcome following
  • complete reframing
  • sport segment


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