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I nfluence diagrams

I nfluence diagrams. Once a decision-making problem is understood and defined, it must be analyzed. B est practice to analyze the problem is to construct model. (Just as a flowchart ) An influence diagram is a map of a model (a model of a model).

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I nfluence diagrams

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  1. Influence diagrams • Once a decision-making problem is understood and defined, it must be analyzed. • Best practice to analyze the problem is to construct model. (Just as a flowchart ) • An influence diagram is a map of a model (a model of a model). • An influence diagram provides visual communication to the model builder or development team. • An influence serves as a framework for expressing the exact nature of the relationships of the DSS model, thus assisting a modeler in focusing on the model’s major aspects, and it can help eliminate the less important from consideration. • The term influence refers to the dependency of a variable on the level of another variable.

  2. Influence diagrams variables • Decision variables: those variables representing a course of action. • Input Variables: those whose values are estimated directly. • Intermediate Variables: those which are calculated based on specified relationships with other variables

  3. Influence diagram symbols Influence diagrams appear in several formats. Let’s agree on this : Decision variables Intermediate or uncontrollable variables Input variables

  4. Decision variables • Decision Variables corresponding to each decision to be made and controlled by the decision maker (the manager). • When a manager chooses a course of action, a value has been set for a decision variable. • Goal-seek point of view

  5. Input Variable • Input Variables are external to the model. They are a “given” to which the manager reacts. (MadjidTavana) • An input variable is an independent variable (not influenced by any other variables in the model).

  6. Intermediate or uncontrollable variables • Intermediate variables are variables whose values are computed as functions of input variables and sometimes of other intermediate variables.

  7. Influence diagram example Profit Consider the following profit model: • Profit = Income – Expenses • Income = Units sold × Unit price • Expenses = Unit cost × Units sold × Fixed cost Income Expenses Unit price Units sold Fixed cost Unit cost

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