McColl Graduate School of Business
BUSN 635 – Decision Science
WHAT HAVE I LEARNED ABOUT DECISION SCIENCE?
The Definition: Many times when faced with a hard decision to make or one that involves many different factors or consequences the executive tends to look for “an educated guess” or “take a calculated risk” but no real calculation is done nor any education is obtained to deal with uncertainty concerning the decision. The main goal of my Decision Science course is to equip executives or any decision maker with tools to deal with the decision making process. The course provides us with a systematic, coherent approach to help with problem solving. …show more content…
Pay the US$ 6 million for the tug boat and get over with the problem would be easier and quicker. But is it in the best interest of the shareholder? In this case we would be pricing a life at US$ 19,000,000, what makes us think if we really are willing to pay this price for a risk that was taken at the minute they decide to go on the ship.
Choice under uncertainty represents the heart of decision science. In order to keep exploring the subject we started to practice the assessment of probabilities. This assessment is personal, subjective and judgmental. But how do you know a good assessor? A good assessor needs knowledge, accuracy and precision. If an assessor is right 50% of the time we can keep considering his/her assessments. An assessor that is wrong all the time cannot be trusted. However, if you get an assessor that is right 100% of the time he/she cannot be trusted either because this assessor might be using too wide ranges to get his/her answers right.
As a managers we can be using the assessments given to us as a decision making tool, because it can bring enlightenment on how many people to hire for a job, or how long it is going to take to get the job done and how much the salaries are going to be placed on. This kind of decisions can be crucial for the financial health of the business. And once again we are using decision science tools to assess uncertainty, to try to minimize the penalty cost, define a better expected value and expected cost.