Shields Capstone Project
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Transcript of Shields Capstone Project
Decision Maker Profile Determination and Decision Modeling to Project Most Likely
Decision Outcomes
April 15, 2011
Matt ShieldsJoe Hartman advising
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Introduction• Have you ever made a bad first impression at a business
meeting?• Did you say something that the customer took completely
out of context?• Did you glance over the topic that the customer found
most important?
How can you avoid this mistake the next time…?
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Purpose
• The purpose of this project is to– Develop a methodology to determine decision profiles – Develop a simulation model to forecast decision
outcomes using decision profile elements– Interpret results to understand decision tendencies and
improve decision-making
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Project Overview
• Most decision support tools determine how a decision-maker should decide -- this project seeks to determine how a decision-maker will decide
• By determining a person’s decision profile and modeling the decision calculus, one may be able to forecast decision outcomes by a person, a group of people, or an organization
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Key Tasks
• Develop methodology to determine a person’s decision profile using biographical, cultural, and behavioral information.
• Assign decision element values for information types as probabilities for simulation and modeling.
• Develop an ARENA Monte Carlo simulation that generates decision element values based upon a decision profile and forecasts outcomes by comparing decision element values to constraints from a decision scenario.
• Interpret the results to determine decision-making tendencies and recommendations.
Methodology
• Capability – Capable of making a rational decision?• Method – How does entity make decisions?• Bias – Does the entity make rational decisions?
MethodologyCapability - Are you able to make rational decisions?
Capacity Responsibility Achievement Power Status
Intelligence Dependability Proven success Reward
Verbal faculty Initiative Productivity Coercive
Originality Persistence Work ethic Expert
Self Confidence Aggressiveness Charismatic
Judgment Self Confidence Legitimate Authority
Cognition Desire to Excel
Methodology
Method - How do you make decisions?
Risk Aversion Efficiency Deliberation Term Participation Involvement
Uncertainty Avoidance
Satisficing Reactivity Favor Near Term
Active
Risk shift for group decision
Prioritization Fully researched Favor Long Term
Sociable
Stability Decentralize Adaptor
Security Cooperation
Conflict avoidance
Need for consensus
Methodology
Biases - Do you make rational decisions?
Conflict Reaction
Values Disposition Personality Emotional Intelligence
Perceptions Judgments
Avoiding Moral Affectivity Extroversion Experience Race
Accommodating Political Pragmatism Tolerance Historical perspective
Sex
Competing Religious Intuition Conscientious Neuroticism Lifestyles
Compromising Philosophy Power needs Openness to experience
Tension National origin
Collaborating Self interest Cognition SecurityStability
Age
Ethical Self Confidence Framing
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Decision Element Assignment
• Derive values for the decision elements to determine how that information group performs in that decision element relative to the general populous
• More “art” than “science”• Based upon research on information groups
– Myers Briggs Type Analysis– Hofstede’s Dimensional Analysis– Sex– Age– Achievement (Education and Work Status)
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Decision Element AssignmentPersonality
MBTI ISTJ ISFJ ESTJ ESFJ ISTP ISFP ESTP ESFP INFJ INFP ENFJ ENFP INTJ INTP ENTJ ENTPCapability Capacity 0.43 0.43 0.55 0.55 0.33 0.33 0.53 0.53 0.60 0.35 0.60 0.55 0.68 0.55 0.68 0.63
Intelligence Verbal faculty 0.30 0.30 0.70 0.70 0.30 0.20 0.80 0.80 0.50 0.30 0.80 0.60 0.20 0.70 0.40 0.80Originality 0.20 0.20 0.20 0.20 0.40 0.50 0.50 0.50 0.80 0.50 0.60 0.80 0.80 0.70 0.80 0.80
Self Confidence 0.40 0.40 0.50 0.50 0.40 0.40 0.60 0.60 0.30 0.40 0.40 0.60 0.90 0.50 0.70 0.70Judgement 0.80 0.80 0.80 0.80 0.20 0.20 0.20 0.20 0.80 0.20 0.60 0.20 0.80 0.30 0.80 0.20Cognition
Responsibility 0.52 0.50 0.55 0.58 0.40 0.22 0.63 0.40 0.50 0.63 0.55 0.65 0.68 0.53 0.68 0.58Dependability 0.90 0.80 0.70 0.70 0.30 0.10 0.30 0.20 0.60 0.70 0.70 0.40 0.70 0.50 0.70 0.50
Initiative 0.40 0.50 0.50 0.60 0.50 0.20 0.80 0.50 0.60 0.70 0.60 0.80 0.40 0.50 0.50 0.50Persistence 0.70 0.60 0.60 0.60 0.40 0.20 0.70 0.30 0.40 0.80 0.50 0.60 0.70 0.60 0.70 0.60
Aggressiveness 0.30 0.20 0.60 0.60 0.30 0.20 0.80 0.40 0.40 0.50 0.40 0.80 0.70 0.50 0.80 0.60Self Confidence 0.40 0.40 0.50 0.50 0.40 0.40 0.60 0.60 0.30 0.40 0.40 0.60 0.90 0.50 0.70 0.70Desire to Excel 0.40 0.50 0.40 0.50 0.50 0.20 0.60 0.40 0.70 0.70 0.70 0.70 0.70 0.60 0.70 0.60Achievement 0.60 0.53 0.57 0.63 0.40 0.20 0.57 0.33 0.50 0.60 0.57 0.53 0.70 0.57 0.67 0.53Proven success 0.40 0.40 0.60 0.60 0.40 0.20 0.70 0.40 0.50 0.40 0.60 0.60 0.60 0.50 0.70 0.60Productivity 0.70 0.60 0.50 0.70 0.40 0.20 0.30 0.30 0.60 0.60 0.60 0.40 0.80 0.60 0.60 0.40Work ethic 0.70 0.60 0.60 0.60 0.40 0.20 0.70 0.30 0.40 0.80 0.50 0.60 0.70 0.60 0.70 0.60
PowerStatus 0.44 0.40 0.64 0.48 0.38 0.20 0.64 0.60 0.46 0.40 0.58 0.64 0.44 0.38 0.58 0.54Reward 0.50 0.60 0.50 0.50 0.30 0.20 0.60 0.80 0.80 0.60 0.80 0.60 0.20 0.20 0.20 0.20Coercive 0.50 0.20 0.60 0.20 0.30 0.20 0.80 0.50 0.20 0.40 0.20 0.60 0.50 0.50 0.80 0.50Expert 0.60 0.70 0.50 0.30 0.80 0.20 0.30 0.30 0.50 0.50 0.50 0.50 0.80 0.80 0.50 0.60
Charasmatic 0.20 0.20 0.80 0.80 0.20 0.20 0.90 0.90 0.50 0.30 0.80 0.80 0.20 0.20 0.60 0.80Legitimate Authority 0.40 0.30 0.80 0.60 0.30 0.20 0.60 0.50 0.30 0.20 0.60 0.70 0.50 0.20 0.80 0.60
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Decision Element AssignmentCulture
• Hofstede compiled large database of cultural information and determined patterns in five dimensions– Uncertainty avoidance– Power Distance– Collectivism– Masculinity / femininity– Short or long term
• Many decision elements relate directly to these dimensions• Hofstede’s dimension analysis on scale of 0 – 100
– Divide by 100 to obtain value as a probability
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Decision Element AssignmentGender / Age / Achievement
• Little “uncontested” research on gender, but most agree that, in general– Men make decisions more efficiently than women– Women are more risk averse and involve more people in decisions– 0.4 or 0.6
• Age – As age goes up, so does experience, deliberation, risk aversion and term orientation
• Achievement – Education level and work force position relate directly to levels of capacity, responsibility, achievement and power status
The ProblemYou have learned of an opportunity to manufacture two new products, a pressure sensor and a dual pressure / temperature sensor. The market for each product is known if the products can be successfully developed. However, there is some possibility that your R&D department will not be able to successfully develop them. Production profit of $600,000 would be realized from selling the dual sensor and of $400,000 from selling the pressure sensor. A production profit of $800,000 would be realized from selling both (full profits not realized due to capacity constraints). All profits account for production cost but do not include development cost. If development is unsuccessful for a product, then there will be no sales, and the development cost will be totally lost. Development cost would be $300,000 for the dual sensor and $100,000 for the pressure sensor. You are the production manager and must decide whether to develop the pressure sensor, the dual sensor, both or neither. The probability of development success is somewhat uncertain, although pressure sensor development success is at least 50%. Dual sensor development relies on successful development of the pressure sensor and is at least 50% of the development success of the pressure sensor.
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Decision Tree
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-$400K
-$300K
-$100K
$0
Alt 4 – Neither. E(x) = $0$0
Success ($800K) P >25%
Failure ($0)
Success ($600K) P >25%
Failure ($0)
Success ($300K) P >50%
Failure ($0)
$400K
-$400K
$300K
-$300K
$200K
-$100K
Alt 1 – Both. E(x) > -$100K
Alt 2 – Dual. E(x) > -$150K
Alt 3 – Pressure. E(x)>$100K
Figure 1 – Decision Tree
Scenario 1 (Routine Decision)• You are the production manager for a profitable plant that is doing better
than its competitors. • It is uncertain if your plant has a sustainable competitive advantage to
continue this trend in the long term.• This development opportunity will be available for the next several
months. (Time availability is not a factor).• The future market for these products is unknown. • Your production team recommends manufacturing both products since they
are both profitable. (Decision point for participation)• Your previous development decisions have all been profitable.• Your plant manufactures 100’s of products – you make these types of
decisions on a weekly basis.
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Scenario 2 (Important decision)• You are the production manager for a profitable plant that is lagging its
competitors. • It is uncertain if your plant has a sustainable competitive advantage.• This development opportunity will be available for the next several months.
(Time availability is not a factor).• The development cycle is one year, and you will not realize these profits
until next year. However, the profits should be sustainable for several years.
• Your production team recommends manufacturing both products since they are both profitable. (Decision point for participation)
• Your previous development decisions have all been profitable.• Your plant manufactures 100’s of products – you make these types of decisions
on a weekly basis.
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Scenario 3 (Important decision)
• You are the production manager for a profitable plant that is lagging its competitors.
• It is uncertain if your plant has a sustainable competitive advantage.• This development opportunity is only available if you make the
decision today. • The future market for these products is unknown. • Your production team recommends manufacturing both products since
they are both profitable. (Decision point for participation)• This is your first production decision.
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Scenario 1 (Routine Decision)
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MakerEnt er Decision
Prof ileAssign Decision Tr ue
False
De c i s i o n ?DM Ca p a b l e o f Ra t i o n a lTr ue
False
De c i s i o n ?DM Ne e d to M a k e Tr ue
False
d e c i s i o n ?Do e s DM m a k e
sensorRecord Pressure
Dispose Pressure
Tr ue
False
Gro u p De c i s i o n ?
do not hingRecord delay or Dispose Not hing
Tr ue
False
Gro u p De c i s i o n ? ? Tr ue
False
d e c i s i o n ? ?Do e s DM m a k e
Record both Dispose bot h
d e c i s io n ?DM wa n t to m a k e Tr ue
False
Tr ue
False
d e c i s i o n s ? ? ?Do e s DM m a k e Record dual Dispose dualTr ue
False
Is h e re a l l y th i s d u m b ?
Tr ue
False
Ra n d o m c h o i c e
0
0
0
0
0
0
00
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Scenario 2 (Important decision)
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M a k e rEn te r De c i s i o n
Pro f i l eAs s i g n De c i s i o n Tr ue
False
De c i s io n ?DM Ca p a b le o f Ratio n a l Tr ue
False
Do e s DM m a k e d e c is i on ?
s e n s o rRe c o rd Pre s s u re
Di s p o s e Pre s s u re
Tr ue
False
Grou p Dec is io n ?
n o th i n gRe c o rd d e l a y o r d o Di s p o s e No th i n g
Tr ue
False
Gro u p De c is io n? ? Tr ue
False
de c is io n ? ?Do es DM m a k e
Re c o rd b o th Di s p o s e b o th
Tr ue
False
de c is io n ?? ?Do es DM m a k e
Re c o rd d u a l Di s p o s e d u a l
Tr ue
False
Lo n g te rm ?
M id te rm ?Tr ue
False
Tr ue
False
d e c is io n?Do e s DM _ m i d m a k e
Tr ue
False
d e c is io n?Do es DM _ s h o rt m ak e
Tr ue
False
Lo ng te rm ? ?
M id te rm ? ?Tr ue
False
Tr ue
False
de c is io n ??Do e s DM _ m id m a k e
de c is io n ??Do es DM _ s h o rt m a k eTr ue
False
Is he re a l l y th i s d u m b ?Tr ue
False
Tr ue
False
Ra nd om s e le c tio n
Lo ng Te rm ? ? ?Tr ue
False
Tr ue
False
M id Te rm ? ? ? Tr ue
False
de c is ion ?? ?Do e s DM _ m id m a k e
Tr ue
False
de c is ion ?? ?Do es DM _ s ho rt m a k e
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Scenario 3 (Important decision)
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M a k e rEn te r De c i s i o n
Pro f i l eAs s ig n De c i s i o n Tr ue
False
De c is i on?DM Ca p ab le o f Ra ti o na lTr ue
False
dec is i on?DM Tim e to m a k e Tr ue
False
dec is i on?Does DM m a k e
s e n s o rRe c o rd Pre s s u re
Di s p o s e Pre s s u re
Tr ue
False
Gro up Dec is ion ?
d o n o th i n gRe c o rd d e l a y o r Di s p o s e No th i n g
Tr ue
False
Group De c is ion ?? Tr ue
False
de c is io n??Does DM m a k e
Re c o rd b o th Di s p o s e b o th
Is h e re a l l y th i s du m b?Tr ue
False
Tr ue
False
de c is io n s ? ? ?Doe s DM m ak e
Re c o rd d u a l Di s p o s e d u a l
Tr ue
False
Ran dom c ho ic e
0
0
0
0
0
0
00
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Results
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AttributesThe Field Marshall
The Free Spirit
Chinese Field
Marshall
Female Field
MarshallYoung Field
MarshallPersonality ENTJ ISFP ENTJ ENTJ ENTJCulture USA USA China USA USAGender Male Male Male Female MaleAge 40 40 40 40 18Education MBA MBA MBA MBA HS
Scenario 1Both 30.3% 13.9% 26.5% 47.3% 33.4%Dual Sensor 0.2% 0.5% 0.3% 0.1% 1.6%Pressure Sensor 45.2% 7.8% 55.8% 28.8% 20.1%Delay or do nothing 24.3% 77.8% 17.4% 23.8% 45.0%
Scenario 2Both 43.0% 50.7% 34.5% 60.8% 54.1%Dual Sensor 0.5% 9.4% 0.6% 0.3% 6.2%Pressure Sensor 55.6% 38.6% 64.8% 36.5% 39.3%Delay or do nothing 0.8% 1.4% 0.0% 2.4% 0.4%
Scenario 3Both 73.6% 72.5% 64.0% 86.7% 77.3%Dual Sensor 0.3% 5.5% 0.4% 0.1% 3.2%Pressure Sensor 25.7% 21.9% 35.5% 11.8% 19.5%Delay or do nothing 0.3% 0.1% 0.1% 1.4% 0.1%
Key Findings• For routine decisions, proposals should emphasize why the manager has a
fiduciary responsibility to continue process improvement since the manager may be reluctant to make a decision.
• For important, but routine decisions, the manager is more likely to choose the rational outcome. Proposals should emphasize why that rational outcome is the best outcome based upon analysis.
• For urgent decisions, managers are more likely to side with the group. Proposals to the production manager should discredit the group logic (if wrong), then provide analysis for the optimal outcome.
• For less rational managers, proposals need to be tailored to discredit the group logic (if wrong) and why the manager should continue process improvement using qualitative (less technical) reasoning.
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Conclusion
• This project provides an initial framework to determine decision profiles and forecast outcomes.
• The results of the simulation runs are useful and can be interpreted to influence senior leader decision.
• More detailed analysis is needed to relate cognitive and behavioral tendencies within the information groups to discrete decision elements for decision profile determination.
• No simulation model fits all – an operations researcher must analyze each decision scenario to tailor the model to the decision space.
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Backups
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Methodology
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Arrival
Entity arrives with decision profile•MBTI•Hofstede’s Dimension•Sex•Age•Achievement
DP1
Decision Point 1Is entity capable of making any rational decisions?
No
Yes DP2
Decision Point 2Is entity capable of making a rational decision given the decision space?
No
Yes DP3
Decision Point 3Will entity make a rational decision given problem dynamics and decision profile?
No
Yes
Strong bias?
Yes
No
Rational Outcome
Biased Outcome
Alternate Outcome
Alternate Outcome
P=.25 P=.25 P=.25 P=.25
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Applicable Theories• Hofstede’s Dimensional Analysis• Myers Briggs Type Indicators• Utility Theory• Decision Trees• Probabilistic Risk Analysis• Monte Carlo Simulation
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Challenges• Translating subjective decision-making processes into
measureable operations research.– Marketing research and Hofstede’s dimensional analysis– Additional criteria for the individual are harder to measure
(personality / achievement)
• Decision calculus database creation and validation– 12,800 individual profiles– City-sized (Houston) distribution needed to validate
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Timeline• January 9-10, 2010: Presentation of proposal and
plan; Written project proposal and plan due to advisor
• February 15, 2010: Progress Report #1 due to advisor
• March 15, 2010: Progress Report #2 due to advisor
• April 17-18, 2010: Written final project report due; Final project presentation