Imperfect Information: The Decision Analysis Blog

DPMX: Answering the Where, How Much, and How To of Resource Allocation

"…the problem with resource allocation isn’t ignorance of its importance—83 percent of executives we polled named it as the most critical management lever for spurring growth." - McKinsey (Where, how much, and how: Answering the hardest questions of resource allocation)

And yet, McKinsey and Company go on to point out that a third of organizations included in a survey reallocate just 1% of capital from year to year. Whether you're talking about money, talent, or time these precious, finite resources tend to be handled by management teams with far too much safeguarding and rigidity -- leaving them in the dust of those who pursue a more deliberately dynamic resource allocation strategy.

How the DPL Software Stacks Up Against Other Decision Tree Software Tools

As a market leader in decision analytic tools, we confidently stand by our claim that DPL is the most powerful, full featured application for decision tree and influence diagram modeling on the market today. DPL offers a dedicated, standalone graphical modeling interface for performing decision and risk analyses, Monte Carlo simulation, and Real Option valuation. The tool's flexibility and intuitiveness allow you to model the characteristics specific to your decisions with a precision unmatched by our competitors.

Calculating the Value of Dodgy Information

Syncopation's recent Fed Rate Hike promotion not only offers you an opportunity to save money on new or upgraded licenses of DPL, it also gives us a platform to discuss important decision making principles, like the value of information.

One of the most powerful facets of a Decision Analysis approach is the ability to explicitly calculate the value of information so one can make an intelligent choice about whether or not to buy it. If you've read our blog before you should already know the following wisdom about VOI:

DPL Fed Rate Hike Promotion: Buy DPL now or Buy DPL later?

After much ado the Federal Reserve decided to maintain interest rates at their current levels this past Wednesday -- which wasn't much of a surprise to most. The Syncopation team saw an opportunity to drum up the drama surrounding the Fed's upcoming November meeting by offering potentially huge savings on DPL licenses, with the amount of savings depending on the outcome of the FOMC's Nov 2 meeting. As a bonus, we're also providing a quick lesson on the value of imperfect information through our promotion. Read on for all the details.

DPL 8.00.14 update is available

The DPL maintenance update 8.00.14 is now available for download. It includes the following:

BUG: Invalid node data after changing a conditioned value node to a discrete chance node (#2010)
BUG: Spurious "too few initializers" error running a model with init links (#2001)
BUG: DPL may stop responding compiling a model with hundreds of DDE linked nodes (#1997)
CHG: Default stack size increased to 16M (necessary for some very complex model structures)

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WSJ on Monte Carlo

Ears always tingle in the decision analytics community when a mainstream publication talks about the things we do, and last Friday, the stimulus was provided by this article in the Wall Street Journal on Monte Carlo. Usually I reluctantly read these pieces fully expecting to cringe at the reinforcement of misconceptions and/or zombie fallacies, but in this instance I have to admit I was positively surprised.

The #2 Reason Why Project Values Get Revised Down

In an earlier post I argued that the #1 cause of downward project revisions in portfolio analysis is a phenomenon called "winner's curse", whereby the error in estimating project values, together with screening criteria, results in more negative surprises than positive ones. In this post, I'll talk about the #2 reason (which might be the #1 reason in some portfolios).

Want to Simplify your ERP/PPM Tools and Processes? Try DPMX!

Deploying a fully integrated PPM System within your organization doesn't have to be expensive, time-consuming, or painful! Embed Syncopation Software's DPMX System into your resource planning processes and start reaping the benefits a straightforward, cost-efficient portfolio analytic system backed by rigorous decision analytics and robust data management tools can bring to your team and portfolio.

Generating Meaningful Tornado Diagrams in Pharma

In a previous post, Chris expounded on the methods for generating good tornado diagrams. It's relatively straightforward to create a meaningful tornado for a business problem defined by a few symmetric quantitative chance events (i.e., the kind with 10/50/90 assessments and Low/Nominal/High outcomes).

Please Don't Use Words to Define Probabilities

In this space we often write about the do's and don'ts of probability assessment and working with uncertainty in general. One of the most fundamental don'ts is that you should not use words to define probabilities. You should more than avoid it, you should never do it. A 15% chance of something happening is exactly that: a 15% chance. Write it as 0.15 if you like, but don't call it a "moderate risk" or say it "probably won't happen".

DPL 9 -- The Tool for Die-hard Decision Tree Fans

Are you a die-hard decision tree fan? Well then you've landed on the right blog. Let me first say that we here at Syncopation (publishers of class-leading decision tree software, DPL) have always prided ourselves on the fact that DPL's modeling interface offers a unique synergism of a Decision Tree and an Influence Diagram. We still hold those sentiments, but during the development of the latest DPL release we came to the realization that for certain users and/or decision-problems the Influence Diagram might be better off taking a backseat.

The #1 Reason Why Project Values Get Revised Down

A topic of considerable lament in portfolio management circles is the frequent downward revision of project valuations. Anecdotally, it just seems like news tends to bring the project value down more often than it pushes it up. Senior management often views this as something sinister, a sign of deception or flawed execution: "Last year you bozos told me this was a blockbuster!".

The 2016 Decision Analysis Society Practice Award

Have you done work in decision analysis that was truly exceptional, either in its quality, impact or degree of benefit to the stakeholders? Why not share your experiences with your peers and be recognized for your contribution?

The Decision Analysis Society of INFORMS conducts an annual competition to recognize outstanding use of decision analysis in solving actual real world problems.

The Expected Value of Various PowerBall Play Options

The PowerBall lottery recently reached a record jackpot – after not having been won since November. Tickets to play the lottery cost $2 each (though there are some multipliers you can add on for a couple extra bucks) and the odds of winning the record-smashing $1.5 Billion jack pot as of yesterday were a minuscule 1 in 292 Million (you can read more about the mathematics behind the lottery in this Wired article here).

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SpaceX Taking Risk Head On and Winning

Nearly one year ago Chris blogged about Elon Musk's honest estimation of the likelihood of soft landing the first stage of the Falcon 9 rocket for future re-use. After two previous failed attempts, SpaceX succeeded Monday (you can see this video of it here) -- a space exploration game-changer. With recyclable rockets in play, costs incurred by future missions are greatly reduced.
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A Gentle Introduction to DPL Constraint Functions

In most DPL models, decisions are made to maximize or minimize some quantity, and they can and should be left unconstrained. You can never have too much NPV, for example. However, some decision problems require making tradeoffs among several decisions where not all possible decision policies (i.e., combinations of decision alternatives) are feasible. For example, your company may only be able to launch one or two new products a year.

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