Decision Analysis for Managers: A Guide for Making Better Personal and Business Decisiones

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Abstract Everybody has to make decisions—they are unavoidable. Yet we receive little or no education or training on how to make decisions. Decision making can be difficult, both in business (hiring, product development, capacity, bidding, balancing R&D versus compliance spending, etc.) and your personal life (dating and marriage, which automobile or house to buy, whether to change jobs or not, where to vacation, retirement, how to deal with health problems, etc.). Decision Analysis (DA) is a time-tested set of tools (mental frameworks) that will help you and people you work with: * Clarify and reach alignment on goals and objectives, * Understand trade-offs associated with reaching your goals, * Develop and examine alternatives, * Systematically analyze the effects of risk and uncertainty, and * Maximize the chances of achieving your goals and objectives. Success (getting what you want) depends on luck and good decision making. You can’t control your luck, but you can maximize your odds by making the best possible decisions. Broadly speaking, this book organizes and presents otherwise formal decision-making tools in an intuitively understandable fashion. The presentation is informal, but the concepts and tools are research-based and formally accepted. Whether you are a business owner, a manager or team leader, or a senior professional, these tools will help you make better decisions in both your personal and your business life. In the second edition of Decision Analysis for Managers, chapters focusing on risk analysis and decision quality have been added. Keywords business decision making, decision analysis, decision and risk analysis (D&RA), decision framing, decision making under uncertainty, decision quality, making decisions, multiattribute decision analysis, personal decision making, portfolio analysis, project risk, risk, strategic decision making, trade-offs, uncertainty Preface Acknowledgments Chapter 1: What Is Decision Analysis?: And Why Should I Care? Chapter 2: How to Start Framing a DA Problem: How Can We Work Together? Chapter 3: The Objectives Hierarchy: What Do We Want? Chapter 4: Decisions and Alternatives: What Can We Do? Chapter 5: Influence Diagrams: What Do We Know? Chapter 6: Uncertainty Assessment: The Boundary between Known and Unknown Chapter 7: Building a Deterministic Model: Time to Run the Numbers Chapter 8: Tornado Diagrams: Figuring Out What Is Important Chapter 9: Cumulative Probability: Looking at the Range of Outcomes Chapter 10: Value of Information: How Much Is It Worth to Know? Chapter 11: Multiattribute Decision Analysis: There’s More to Life than Money Chapter 12: Decision Quality: How Well Have We Done? Chapter 13: Risk Analysis: I Want It Cheap and I Want It Now Chapter 14: Other Topics: More Things to Think About Notes References Index