Operations Management: Processes and Supply Chains, 12th Edition

Supplement A Decision Making

Learning Goals

After reading this supplement, you should be able to:

1. Explain break-even analysis, using both the graphic and algebraic approaches.

2. Define and construct a preference matrix.

3. Explain how decision theory can be used to make decisions under conditions of certainty, uncertainty, and risk.

4. Describe how to draw and analyze a decision tree.

Operations managers make many decisions as they manage processes and supply chains. Although the specifics of each situation vary, decision making generally involves the same basic steps: (1) recognize and clearly define the problem, (2) collect the information needed to analyze possible alternatives, and (3) choose and implement the most feasible alternative.

A manager ...