Spring 1995
Tuesdays 1-4
CBA 4.342

Office Hours: Tuesday, 4:00 - 5:00 (or by appointment)

This seminar focuses on the application of decision theory to the quantitative analysis of risky decision problems. Risky decision problems generally involve large amounts of resources that must be committed to alternatives in competitive and uncertain environments. Examples would include corporate acquisition decisions, new product decisions, major capital investment decisions, and choices among alternate technologies. Many of these problems can be conceptualized and structured using the ideas of decision theory. A series of case studies will be used to illustrate the application of these methodologies. A key element of this course will be the use of microcomputers as a tool for performing the case analyses. This will include standard programs (e.g., Excel) and state-of-the-art software (DPL and LOGICAL DECISIONS). Students are expected to prepare the assigned cases, participate in seminar discussions, and complete a course project.

This is not simply a "techniques" course. Class discussions will include considerations of why quantitative techniques are useful, and also consider how they can be made more useful to real decision-makers. This course is designed for graduate students with a general interest in the use of quantitative methods for aiding decision-making. It would be an appropriate component of MBA concentrations in corporate and strategic planning, management consulting, decision support systems, financial investment analysis, and marketing strategy, among other areas. It should also appeal to MS students in engineering interested in applications of decision analysis to oil and gas exploration, construction management, management of electrical utilities, and related areas. This course can also be used as a first course for doctoral students interested in research on theoretical and applied aspects of decision theory.

The class format will be approximately 50% lecture and 50% student presentations and discussions. Cases and assigned problems are due on a weekly basis. Late assignments will not be accepted. Each week one or two students will be expected to present that week's assignment to the class. The presentations should follow the form of a report by a management consultant to a client. Emphasis will be placed on both content and style: the analysis should be competent and well-thought-out, but it should also be presented in a professional manner.

A short term paper will be assigned at the end of the course. Suggested topics include: (a) A critical examination of an actual application of decision analysis to a problem or set of problems. (b) An actual application of decision analysis to a real-world problem. (c) Develop and/or critically evaluate some computer software intended to aid the application of decisions analysis to real problems. (d) Investigate advanced topics related to some facet of decision analysis. (e) Any other interesting topic related to the application of decision analysis. (Note: Ph.D. students are strongly encouraged to consult with the instructor to identify a topic that relates to their research interests.) The term paper is due at the last scheduled class session (May 5).

Grading:

Weekly Cases and Assigned Problems: 50%

Final Project: 30%

Class Participation: 20%

Materials:

1. Clemen, R.T., Making Hard Decisions, PWS-Kent Publishing Company, 1990.

2. Other cases and supplemental material will be made available.

Prerequisites:

This course is intended for graduate students who have completed the MBA core courses in Statistics, Management Science, Operations Research, and Microeconomics, or their equivalent. No prior computer experience is required. No calculus or higher level mathematics will be required. However, it will be helpful if you feel comfortable with the use of quantitative methods.

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