Supplement A Decision Making
Learning Goals
After reading this supplement, you should be able to:
Explain break-even analysis, using both the graphic and algebraic approaches.
Define and construct a preference matrix.
Explain how decision theory can be used to make decisions under conditions of certainty, uncertainty, and risk.
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 ...
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