Business Case Analysis with R: Simulation Tutorials to Support Complex Business Decisions

© Robert D. Brown III 2018

Robert D. Brown IIIBusiness Case Analysis with Rhttps://doi.org/10.1007/978-1-4842-3495-2_14

14. A More Refined Explanation of VOI

Robert D. Brown III¹ 

(1)

Cumming, Georgia, USA

 

Now that we have a notional bird’s-eye view of VOI, let’s explore how to quantitatively evaluate it from a simple instructive example. We start with a decision tree example, then move to the now familiar influence diagram representation.

The Decision Tree

Imagine that you are a member of a strategic planning group in a biomedical device company. After learning how to generate creative decision strategies, your group is considering two strategic pathways to take a new device to market. You have determined that the value of each strategic pathway ...