Operations Management: Sustainability and Supply Chain Management, Twelfth Edition

Fundamentals of Decision Making

Regardless of the complexity of a decision or the sophistication of the technique used to analyze it, all decision makers are faced with alternatives and “states of nature.” The following notation will be used in this module:

1. Terms:

   1. Alternative—A course of action or strategy that may be chosen by a decision maker (e.g., not carrying an umbrella tomorrow).

   2. State of nature—An occurrence or a situation over which the decision maker has little or no control (e.g., tomorrow’s weather).

2. Symbols used in a decision tree:

   1.  —Decision node from which one of several alternatives may be selected.

   2.  —A state-of-nature node ...