Engineering Decision Making and Risk Management

Chapter 2Decision-Making Fundamentals

Learning Objectives:

After studying this chapter, the reader will be able to do the following:

1. Identify the context of a decision situation (Section 2.1).
2. Select an appropriate decision-making approach for a decision context (Section 2.1).
3. Distinguish fundamental objectives from means objectives (Section 2.2).
4. Create a fundamental objectives hierarchy (Section 2.2).
5. Create a means-objective network (Section 2.2).
6. Draw an influence diagram of a decision situation (Section 2.3).
7. Identify types of rationality (Section 2.4).
8. Identify dominated alternatives in a multiple-criteria decision (Section 2.5).
9. Identify choice strategies (Section 2.6).
10. Use Benjamin Franklin's method to choose between two alternatives (Section 2.7).
11. Describe the importance of “framing” a decision situation (Section 2.8).
12. Identify risk acceptance criteria (Section 2.9).
13. Identify types of measurement scales (Section 2.10).
14. Identify appropriate operations for specific measurement scales (Section 2.10).

This chapter discusses some important fundamental concepts that, when understood, can help one improve decision making. Understanding the decision context (Section 2.1) helps the decision maker select an appropriate decision-making strategy and choose relevant objectives. Identifying the fundamental objectives and the means for achieving them (Section 2.2) helps a decision maker focus on what is important and generate effective alternatives. Mapping the relationships ...