
66 Decision Based Design
two-dimensional surface. As the number of variables increase, represent-
ing the optimal decision regions becomes harder. Sensitivity analysis is
therefore done by rst selecting a baseline design. One or two considered
are then considered at a time, while setting other parameters constant, to
evaluate their effect on the optimal decision.
3.6 Certainty Equivalent of a Decision
Many times, one needs to determine how much a decision situation involv-
ing uncertainty is worth in sure amounts. Consider the following examples:
A company intends to acquire a license to implement a patented technology.
It has to pay the licen