This course introduces the basic techniques of modern decision analysis, which quantitatively evaluate the risks associated with making decisions in various disciplines. Influence diagrams and decision trees are introduced as methods for building mathematical models of decision problems, which are then analysed. Analysis involves an evaluation of options, modelling the uncertainty in these options and considering the influence of preferences and subjectivity in its results. Because models are only instruments aimed at assisting the decision-maker in making optimal decisions, the course also discusses the decision-maker’s attitude toward risk and looks at mechanisms to incorporate it in decision analysis models.
Nine of the twelve lectures are conducted through a combination of theoretical discussions and practical applications, which involve hands-on demonstrations using a suite of software. The range of practical applications is broad and includes examples from the manufacturing, environmental, financial and marketing fields.