Objectives

Introduction to principles and methodsof decision and risk analysis, with an emphasis on the application of quantitativemodels to management situations characterized by conflicting objectives,uncertainty, and risk. The goal of this course is to provide students withthe tools, techniques, and skills needed to represent complex real-worldmanagement problems using models that provide insight and understanding.

Who Needs A Course On Decision Analysis?

This course is part of the MBA program’s"flexible core." This course is about improving the decisionmaking processes of managers and helping them to achieve better decisionoutcomes. We will focus on specific techniques and approaches for analyzingcomplex decision making situations. These techniques have been widely appliedat leading corporations and consulting firms. It is particularly suitablefor students interested in developing skills for careers in managementor financial consulting, information systems, corporate strategy, or anyother area where it is important to combine quantitative analysis withinsights about human capabilities for dealing with complex problems. Thematerial covered here is from the field of decision analysis, anarea that draws from both management science and behavioral decisionscience. Managers and consultants have successfully applied these methodsto many different areas, including strategic planning, financial analysis,marketing, operations management, human resource management, accounting,and risk analysis. Cases and examples will be drawn from a variety of industries(including healthcare, oil & gas, real estate, and software/technology)and functional areas of business (including strategic financial planning,marketing, operations, human resources, and accounting).

Office Hours

My office is located in 208 CommerceWest. I have regularly scheduled office hours on Mondays and Thursdaysfrom 10:00-11:00 a.m. and from 1:30-2:30 p.m. I am also available via FirstClass,and via E-mail (dnk@uiuc.edu).

Course Requirements

• A course schedule with readings andassignment is provided below, including due dates for written assignments.
• The class sessions will involve amixture of lecture and case discussion. Students are expected to completethe assigned pre-class readings and be prepared to discuss the cases andissues in class.
• Because the material in this courseis cumulative, it is important to keep current with what is going on. Experienceshows that students who have difficulty with this material generally havenot kept up with the assigned readings and hence fall behind.
• This course builds directly upon thematerial in the MBA core modules (BUS 401, 402, 403). Most of the caseswill involve the use of microcomputers. General familiarity and proficiencywith Microsoft Excel for Windows will be assumed.

Individual and Team Assignments

• Some written assignments are to bedone individually and some by teams.
• Individual assignments: Youmay consult with other students about an individual assignment, but youmay not examine another student’s written work, nor may you allow anotherstudent to examine your written work. Copying of solutions from any sourceis prohibited under any circumstances.
• Team assignments: Studentsare responsible for forming their own teams. Teams are responsible fordividing up the work and organizing their own activities. Teams must consistof no more than three individuals. Students may, at their option,choose to complete team assignments individually. (While this option ispermitted, it is not recommended—team assignments are designed to be challenging.)For team assignments, you are free to consult with your team members, butyou may not consult with anyone else. You may not examine another team’swritten work, nor may you permit another student to examine your writtenwork. Copying of solutions from any source is prohibited under any circumstances.
• Important Notice: Often, wewill discuss written assignments during the class session in which theyare due. Consequently, the following policy regarding late papers willbe strictly enforced: Written assignments must be handed in at the beginningof the class session on the day on which they are due. Late papers willonly be accepted under exceptional circumstances, such as a fully documentedUniversity-authorized absence, and those circumstances must be agreed uponby the instructor prior to the specified due date.

Quiz and Exam

• There will be a quiz at the beginningof the class session on April 10.
• The final exam is tentatively scheduledfor the morning of May 16. The exact place and time is subject to confirmation.
• Both the quiz and the exam are open-book,open-note. You may bring whatever books and/or notes you wish to referto. Calculators will also be necessary.
• If you miss the quiz or the final,you will receive a score of 0. Exceptions require a fully documented University-authorizedabsence, and, whenever possible, you must contact me prior to the dateof the quiz or exam.

Grades

The grades for the course will be determinedby aggregating scores from the following components, using the weightsindicated. Scores on components will be standardized to adjust for differencesin mean and/or standard deviation (z-scores). All means and standarddeviations will be published on FirstClass, as will the exact formula usedto compute the course grade.

Academic Integrity

Violations of academic integrity areconsidered a serious offense at the University of Illinois. Violationsof academic integrity include: Copying the work of another student on anexam or a written assignment, plagiarizing (using someone else’s work withoutappropriate disclosure), and unauthorized use of solution sets or othermaterials from this course in previous years or any other source. Any studentjudged to have violated academic integrity will be subject to the penaltiesdiscussed in section 31 of the Code on Campus Affairs. These penaltiescan include receiving a score of zero on the assignment or exam in question,a failing grade for the entire course, or even dismissal from the University.

Required Texts

• Kirkwood, Craig W. Strategic DecisionMaking: Multiobjective Decision Analysis with Spreadsheets. DuxburyPress/Wadsworth, 1997.
• Bodily, Samuel E., Carraway, RobertL., Frey, Sherwood C., Jr., & Pfeifer, Phillip E. Quantitative BusinessAnalysis Casebook. Irwin, 1996.

Recommended Text

• Russo, J. Edward. & Schoemaker,Paul J. H. Decision traps: The ten barriers to brilliant decision-making.Simon & Schuster, 1990.

Biographical Information

Don N. Kleinmuntz, Ph.D., is Associate Professorof Accountancy and Weldon Powell Faculty Fellow at the University of Illinoisat Urbana-Champaign. He has a B.A. degree in statistics, an M.B.A., anda Ph.D. in decision research, all from the University of Chicago. ProfessorKleinmuntz has been at the University of Illinois since 1989, and previouslyheld faculty positions at MIT and the University of Texas at Austin. Heis a recognized scholar in the field of judgment and decision making, withover 15 years of research and consulting experience. In 1993-1994, theUniversity designated him a University Scholar, and he was appointed anAssociate in the University’s Center for Advanced Study during 1994-1995.In 1996, he was named a Fellow of the American Psychological Society. Heis an Associate Editor of the journal Management Science, and serveson the editorial board of the journal Organizational Behavior and HumanDecision Processes. Professor Kleinmuntz currently conducts researchand teaches courses on using decision analysis models and frameworks toimprove decision making in accounting, financial planning, and managementsettings. He is also a founder and Executive Vice President of Strata DecisionTechnology, Inc. Based in Champaign, Strata provides advanced decisionanalysis software tools and management consulting services to support strategicfinancial decision making in the U.S. healthcare industry.

Course Schedule and Outline

KEY: SDM = Kirkwood, Strategic DecisionMaking.
Case titles are shown in italics. Most are from QuantitativeBusiness Analysis Casebook.
Cases shown with an asterisk (*) will be distributed in class or overFirstClass.

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