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MSE 52 Summer 2019 Syllabus
MSE 52 Summer 2019 Syllabus
Course Description: When we make high-quality decisions, we improve the probability of outcomes
we want. By combining the art of qualitative framing and structuring with the science of
quantitative modeling and analysis, we then have pragmatic ways to: collaborate with stakeholders,
identify relevant issues, craft an inspirational vision, develop creative and viable alternatives, assess
unbiased probabilistic information, clarify tangible and intangible preferences, build appropriate
risk/reward models, evaluate decisions across a broad range of uncertain scenarios, analyze key
sensitivities, appraise further information, and ensure commitment to implementation plans.
Common-sense rules and decision-making tools provide the essential focus, discipline, and passion
we need for clarity of action on significant decisions – from personal choices to organizational
decisions about business strategies or public policies. Decision case studies highlight insights about
energy economics, mine remediation, ocean resource preservation, bison brucellosis mitigation,
nuclear waste storage, hurricane seeding, environmental risk management, R&D innovations, oil
and gas options trading, electric power production, litigation risk, and venture capital investments.
Our normative approach prescribes how decisions should be made from a logical basis of
deliberative reasoning when we face a dynamic, complex, and uncertain future world. Lectures
include examples of real decisions being made in private and public, business, nonprofit, and
government organizations. Group exercises, interactive demonstrations, and "war stories" drawn
from decades of decision consulting experience illustrate insights from using state-of-the-art
methods of decision analysis. Professional management consultants and skilled practitioners
provide guest lectures. Optional discussion sections introduce more advanced topics.
Textbook: Decision Analysis for the Professional, by Peter McNamee and John Celona, is an optional,
supplementary textbook available under a Creative Commons license as a free pdf download from
the Canvas website by students registered for this course. Paperback copies are available for
purchase in the Stanford Bookstore. Those students interested in pursuing a more in-depth study of
this field may wish to purchase from the Stanford Bookstore or online sellers the recently published
graduate-level textbook, Foundations of Decision Analysis, by Professors Ron Howard and Ali Abbas.
Instructor: Burke Robinson is a Lecturer in the Sustainability Science and Practice Program, School of
Earth, Energy, and Environmental Sciences, and in the Management Science & Engineering
Department, School of Engineering. He has been an adjunct faculty member at Stanford for the past
20 years, and has more than 40 years of experience in decision consulting as well as teaching
decision analysis. He is always available, both before and after each class, to answer any questions
you have about the lectures, problem set solutions, exam answers, team decision analysis projects,
or any other aspect of the course. Lecture materials are available as pdfs on the Canvas website. His
email is burkerob@stanford.edu and his personal website is www.burkerobinson.com.
Grading Points and Policies: A total of 750 points are possible for those students enrolled for 3 units
and a total of 1000 points are possible for those students enrolled for 4 units. The following points
breakdown and grading policies apply for this course.
Problem Set Assignments are posted on Canvas on weeks 1, 3, and 5. Solutions are posted one day
later. You are responsible for completing the assignments and then reviewing solutions to see
where you fully understood the material and where you may need a better understanding. You are
free to work on these assignments with other students in a mutual learning environment.
In-Class Exams are given during weeks 3, 5, and 8. If you have understood each Problem Set
problem and its solution, and have attended and absorbed fully every class lecture, you should do
well. Each exam is worth 100 points and has 20 multiple-choice questions. Students must bring to
the exam classroom their own laptop computer, tablet, smart phone, or other electronic device with
Wi-Fi connectivity to download the exam from our Canvas website and submit it as a Google Doc.
Decision Analysis Project teams form during week 1. Only those students enrolled for 4 units are
required to join a team of 3-4 people to do a quarter-long decision analysis project for a decision
maker who is actively in the process of making an important organizational decision. Progress
reviews are scheduled each week during the quarter at a convenient time for each team, starting on
the first week. Final presentation slides for these projects must be submitted to Canvas by midnight
on the Sunday night following week 7, and then delivered at a convenient time for each team on
Tuesday of week 8. All team members receive the same grade, reduced only by negative feedback
from teammates about attendance, work effort, and work quality.
The Take-Home Final Exam is open-notes and open-book. It will be available on Canvas immediately
after our last class and is due no later than 10 pm on Saturday of Week 8. You will lose one point for
each minute that the exam is late. You should budget around 9 hours to complete the exam,
including time spent formatting, editing, and rewriting your answers to be clear and concise.
No collaboration of any kind with others is allowed at any time during this exam period!
You must electronically sign the Stanford Honor Code and abide by it at all times.
WHEN WHAT Assignments
Sa 17 AUG 19 Final Exam due as Canvas submission by 10pm (exactly) – minus 1 point for each minute late
Team Decision Analysis Project: Examples from previous years are described below.
A university faced declining enrollment and needed to decide how to modify curriculum,
tuition, and admissions policies to increase the number of students graduating.
Uncertainties about costs, residence life, and yield rates were critical.
A medical technology startup was deciding what FDA approval strategy to pursue while
developing additional features of its product. Uncertainties included competition, approval
time, and R&D success.
A city council had to decide whether to approve a second phase of real estate development
within its city boundaries. Issues ranged from environmental and traffic concerns to tax
revenue and revitalization of the city.
A Native American tribe in Alaska considered how to provide reliable and reasonably priced
alternatives for home heating. Current expensive, diesel-fueled, electric heating can be
replaced economically by hydro power and heat pumps, but will require adoption of new
technology by traditional communities.
A major international airport evaluated plans for expansion of its airport to allow for more
international gates, increased concession revenue, and better coordination with domestic
flights. Uncertainties included expansion by other airports competing for international
routes, financing available from public and private sources, community approval for
increased noise and traffic in exchange for more jobs.
A file storage company was deciding how to transition from a focus on retail consumers to a
focus on enterprise solutions. Uncertainties included competition from established large
companies, cannibalization of its product, and acceptance by customers of new pricing.
A family-owned precision metal manufacturing company was deciding whether to acquire a
competitor or to build their own new plant in response to increased demand for their
products. Key uncertainties included how well will the two cultures will integrate, whether
the technology used will work as needed, if the company’s brand and reputation will be
strong, what the overall market demand will be as a function of GDP growth, and how much
will costs be reduced?
A family-owned winery was deciding how to expand and replant its acreage, what fraction
of its production to sell as grapes vs. bottle as wine, and how much to sell to its distributors
rather than directly to restaurants and other customers. Critical factors were the land
values, farming costs, bottling costs, wine price and discounts offered, and growth rate of
consumer-directed sales.
A name-brand tennis racket manufacturer needed a distribution strategy for India and China
that considered sponsoring professional players, which distributor to use, and how to
incentivize the distributor’s sales. Major uncertainties were the appeal of their product line
when offered to different market segments, the sales effectiveness of the distributor, duty
and transportation costs, tennis market growth, and their market share.
An educational services company was choosing what services to offer to universities:
textbook sales and rentals, course schedule and evaluation software, Problem Set tutoring,
and computer repair. Uncertainties were effectiveness of promotions, market share as a
function of timing and number of competitors, cost of textbooks, acceptance by highly
regarded universities, and customer loyalty from year to year.
A leading social media company’s decision was how to monetize their platform. Decisions
covered payment methods in different countries, advertising, and mobile options.
Uncertainties were ease of use, increase in users, user willingness-to-pay, cannibalization of
market share by mobile apps, average revenue per user, and transaction fees charged.
A major database management and business software company wanted to choose the best
strategy for launching its enterprise search applications, including decisions about prototype
design, timing, feature development, and marketing. Uncertainties ranged from market
growth rate and customer value proposition to development costs and competitor offerings.
A high-tech startup company faced typical new venture decisions and risk about product
design and development, market roll-out and acceptance, growth in market share,
competitor strategies, product life cycle, and angel/VC financing. Although many
uncertainties were characterized by very low probabilities of success, they also had very
high profits if successful.
A suburban city’s library decisions considered locations, staffing, automation, and electronic
document catalogs. Uncertainties included budget available, patron usage, staffing
turnover, electronic materials costs, and patron willingness to pay for services.
A commuter rail service company had to decide about structures for pedestrians and traffic
to cross tracks, including gates, overpasses, underpasses, or elevated structures. Critical
uncertainties were projected injuries and fatalities, noise levels, construction costs, ease of
use, and aesthetics. In addition, multiple stakeholders’ concerns needed consideration,
from city residents and politicians to rail executives, regulators, and shareholders.