MS&E 252 Handout #1

Decision Analysis I September 25th, 2007

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Course Guide to MS&E 252

Decision Analysis I

Welcome to Decision Analysis I. This course guide has been developed to give you an
introduction to the course; the logistics involved and emphasize many important aspects.
Please read this handout carefully.

Warning – This is a preliminary version of the course guide. It will be updated

during the first week of classes.

Introduction

Everyone makes decisions, but a few people think about how they do it. Psychological
research shows that in many simple decision situations people make decisions that upon
close examination they regard as wrong. Decision analysis is the normative field of
decision-making. Throughout the course, we will develop rules of thought that will
transform complex decisions into simpler decision situations where the course of action is
clear. We will create powerful distinctions that will improve your personal decision-
making and enable you to help others with their own decisions.

Message from Ron Howard

Decision analysis is the best way I know how to make decisions. That’ s not to say that
thinking about decisions is important, but if you do wish to think about your choices,
decision analysis is the best way I know how to achieve clarity of action. In MS&E 252, I
will profess how to carry on a conversation for achieving clarity of actional thought by
combining precisely defined concepts. Throughout the quarter, I will ask you to
demonstrate your proficiency at conducting a professional conversation about decision-
making building on the concepts present in lectures or in course materials. I guarantee
that MS&E 252 will help you create powerful distinctions to improve your personal
decision-making and to help others with their decisions.

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Decision Analysis I September 25th, 2007
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Lectures and Problem Sessions

Lectures

Day: Tuesdays and Thursdays

Time: 11:00 a.m. to 12:15 p.m.
Location: Terman Auditorium

Professor Howard, one of the founders of Decision Analysis and a teacher and
practitioner for over 30 years, will lead the lectures. The lectures have been developed to
demonstrate lessons that have been learned through the practice and teaching of decision
analysis. Professor Howard’s style features a mix of Socratic dialogue, demonstration,
lecture, and directed inquiry. The lecture demonstrations capture the essence of applying
decision analysis to 'real' problems. Try to appreciate the philosophy and depth behind
what is being taught in the lectures and demonstrations, even if they appear deceptively
simple. Listen carefully to the questions posed and the responses provided by Dr.
Howard. There is a deep meaning in every conversation. The course is interactive:
contribute your enthusiasm and energy and you will be rewarded many times over. Before
asking or answering a question in the lectures, please say your name. We would like to
know you throughout the quarter just like you know us. The lectures will not always
cover computational details, which will be addressed in problem sessions by the teaching
assistants.

We typically make announcements at the beginning of class; these will concern

assignments and other course-related information. Handouts will be available on the web
page for printout or reference. Additional handouts not available on the web page will be
provided at the beginning of class.

Problem Sessions

Attendance to both the class lectures and the problem sessions will be crucial to your
success in the course. We will have several problem sessions running at the same time:

Day: Tuesdays
Time: To be announced, but most likely 5:30 p.m. to 7:00 p.m.
Location: To be announced

After the first week, you will be assigned to one of the problem sessions. The assignment
will take place by the class roster on Axess. Please make sure you have registered on
Axess for the course or your assignment to a problem session may be delayed. This
assignment process is to help you meet and work with new people. We have put a lot of
effort to ensure that the material covered in each of the problem sessions led by the
different TAs is very similar. Please be assured that to whichever problem session you are
assigned, you will cover the same material as any other problem session.

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Decision Analysis I September 25th, 2007
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During problem sessions, we will ask groups to present certain material from class,
summarize the assigned readings, answer any questions you may have about class lectures
and homework assignments, work through quantitative problems that illustrate concepts
covered in the lectures, and help you apply and challenge what you are being taught.

The problem sessions provide an essential extension of the material covered in the
lectures and are intended to deepen your understanding of DA concepts as well as to
cover the calculation aspects of the course. There will be one televised problem session
and it will be available on the web.

In this class, we understand the value of your time, and will treat this very professionally.
We will also expect the same level of professionalism from you. In view of this
professional environment, we will not accept any late assignments unless you have
previously contacted your section TA and obtained permission to do that (which will be
in very rare cases).

Please address any administrative questions about the course to the teaching assistant in
charge of your section. Also please do not direct any administrative questions to Professor
Howard except upon your teaching assistant’s suggestion.

Office Hours

We will be holding several office hours to answer questions related to lectures, problem
sessions or homework assignments. Time and location of office hours will be announced
in class and on Coursework.

Sign Up On Axess As Soon As Possible

Once again, it is important to sign up on Axess as soon as possible. We will retrieve the
class list form Axess and send important logistics and clarification announcements via e-
mail. We will also assign you to the problem sessions from the class roster on Axess.

On-Line Access to lectures and problem sessions

All class lectures and one problem session will be recorded and broadcasted on SITN and
SCPD channels. In addition, the lectures and problem sessions will be available on the
web 2 hours after recording is complete. To access the online lectures from any terminal
on campus, go to:
http://scpd.stanford.edu/scpd/students/onlineclass.htm
Select Academic Courses.
Select MSandE 252.

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Decision Analysis I September 25th, 2007
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SITN students watching the class remotely will need to get a password from their SITN
coordinator.

The Web Page

http://coursework.stanford.edu/

Please visit our website on coursework regularly. It has contact and background
information about us, the course schedule, handouts, announcements, FAQs, and a
discussion forum where you can submit any questions you might have about assignments
or course concepts.

Handouts

We will be asking you to read many handouts throughout the quarter. Most of the
handouts will be available on the web; others will only be made available as hard copies,
and will be distributed in class and via SCPD for remote students.

Problem Session Slides

Throughout the problem sessions, we will be using many power point slides and
demonstrations. As often as possible, problem session slides will be posted on the
coursework website prior to the problem session.

Required Texts
Decision Analysis Manuscript, Ronald A. Howard, 2002. This is available at the
Stanford bookstore and also on reserve in Terman Engineering Library. Please bring a
copy of the manuscript to all lectures. The manuscript will also be used in MS&E 352.

Collection of Readings. This is available at the Stanford bookstore and also on reserve in
Terman Engineering Library. Throughout the quarter, reading assignments will be given
from this course reader. This collection of readings is essential for understanding basic
concepts and for anyone serious about learning Decision Analysis. Please bring your
manuscript to each lecture and be prepared to participate when called upon.

Additional Readings.
The collection of readings provides a fundamental set of reading material. There may be
other readings of interesting which are not yet in print. We will make sure that copies of
additional reading material are available on reserve in Terman library and a reference to
the journal or magazine is given out.

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Decision Analysis I September 25th, 2007
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The Teaching Team

Professor: Ron Howard

rhoward@stanford.edu
Terman 420
(650) 723-4176

The members of the teaching team are fellow Ph.D. or M.S. students who have all taken
the DA sequence in the department (and excelled in the course). We believe that we will
all learn Decision Analysis together throughout this process.
The Decision Analysis Teaching Assistant Office (DA TA office) is located in Terman
406A. Phone: (650) 723-1467.

Name E-mail

Ibrahim Al Mojel mojel@stanford.edu

Thomas Seyller tseyller@stanford.edu

The names of 3-4 more teaching assistants will be

announced later.

Homework Assignments

There will be weekly homework assignments provided on the web page each Thursday
and due the following Thursday 11:59pm. You are allowed to work in groups if you
choose, however you must submit your own work.

Homework assignments will generally include some or all of the following:

1) Reading assignments.
2) Definitions.
3) Probabilistic questions.
4) Quantitative problems.
5) Food for thought.

You are to submit your answers to the Probabilistic and Food For Thought questions
using the course web page. Unless otherwise mentioned, you will NOT need to turn in
your solutions for the whole assignment. Each homework will include a brief of what
questions are to be turned in. However we will expect a full knowledge and command of
the material covered in the other sections that you will not turn in. Solutions to the full
HW assignment will be distributed one week after the assignment is handed out. Answers
to Food For Thought section are optional but can contribute to your participation grade
and will give us feedback on the overall grasp of certain topics of the course. The

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different sections of the homework assignments will be further discussed in the problem
sessions.

Case Study

Towards the end of the quarter, we will provide a case study so you can apply many of the
concepts you learnt throughout the class in a complex decision setting.

Exams and Grading Policy

There will be two exams during the quarter; a midterm and a final. The midterm is
tentatively scheduled for October 25th. It will be closed book, closed notes and open
mind. The format will be the same as the probabilistic format of the homework
assignments. The final will contain both probabilistic and analytical sections. It will be
scheduled according to the Autumn Quarter Time Schedule.

Professor Howard believes that the commitment to provide course grades interferes
with his ability to provide learning experiences and exercises, so he delegates the
course grading to the rest of the teaching team.

The breakdown of your final grade is shown below:

Homework Assignments: 25%

Case Study: 10%
Mid Term: 25%
Final: 40%

Participation will be taken into account for students who are both exceptionally active
and who make pertinent comments in class. For those students, participation might
translate into a final letter grade that it is one increment higher than it would have been
otherwise (e.g. A instead of A-, A- instead of B+, etc.).

SCPD Students

We have many students who are watching the class remotely via the SCPD network. For
this reason, please make sure that when you ask or answer a class in lectures or in the
televised problem session, you use your microphone to help remote students listen to the
conversations in class.
Also for SCPD students who are local and wish to attend the problem sessions you will
be assigned to one of the sessions. You will also be required to form a group and work
with the attending students in the class.

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MS&E 252 Handout #1
Decision Analysis I September 25th, 2007
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If you cannot attend problem sessions or are not local it may be difficult to arrange for a
group for you to work with directly. However, you will still provide all HW assignments
and exams on the web and present the case in the form of a power point slide and/or word
document. We will also be available to help via e-mail and telephone. We also
understand that your assignments are individual.

Honor Code

All students and members of the teaching team are expected to follow Stanford
University's Honor Code. If you are not familiar with the Honor Code, please refer to The
Stanford University Bulletin.
Students may discuss and work on homework problems in groups but must assign
probabilities to all possible answers on their own. When submitting assignments, students
should write the names of people with whom they discussed the problems in the
assignment.

As we occasionally reuse problem set questions from previous years, we expect the
students not to copy, refer to, or look at the solutions in preparing their answers. It
will be considered an honor code violation to intentionally refer to previous year's
solutions. The purpose of problem sets in this class is to help you think about the
material, not just give us the right answers.

Wishing you all a wonderful learning experience,

The DA Teaching Team.

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