Department of Industrial and Systems Engineering

King Fahd University of Petroleum & Minerals

Dhahran, Saudi Arabia

ISE 527: Decision Making

Term 232

Instructor: Dr. Ahmed Attia

Office: 22 – 240
Tel: 013 860 2905
Email: amattia@kfupm.edu.sa
Office Hours: MW 11:30 – 12:30 and 16:00 – 17:00
Class Schedule: Section 01: MW 17:20 – 18:35 Room 24 – 249

Catalog  Structuring decision problems: single criterion versus multiple criteria, certainty versus
Description: uncertainty, formulating risk, multiple criteria and attributes, payoffs, and losses.
 Utility function for decision-making.
 Decision-making with single and multiple criteria under certainty.
 Decision-making under risk: decision trees, single and multiple stages.
 Value of information.
 Decision-making under uncertainty.
 Decision-making under conflicting objectives.
 Multi-criteria decision-making techniques.
 Case studies.

Prerequisite: Graduate Standing

Textbook:  Clemen, R.T., and Reilly, T., "Making Hard Decisions with DecisionTools," 3rd
Edition, Cengage Learning, 2014.
 Handouts.

References:  Chelst, K.R., and Canbolat. Y.B., "Value-Added Decision Making for Managers,"
Chapman and Hall/CRC, 2011.
 Goodwin, P., Wright, G., "Decision Analysis for Management Judgment," 4 th Edition,
Wiley, 2009.
 Multi-Criteria Analysis: A manual, Department for Communities and Local
Government: London, 2009.
 Figueira, J., Greco, S., Ehrgott M., "Multiple Criteria Decision Analysis: State of the
Art Surveys," International Series in Operations Research & Management Science,
Volume 78, Springer, 2005.

Objectives: 1. To provide students with advanced models, techniques, and applications for
formulating and solving complex decision problems.
2. The models include decision-making with single and multiple criteria and decision-
making under risk, uncertainty, and conflict.

Learning Upon successful completion of this course, students should be able to:
Outcomes: 1. Formulate and structure decision problems under certainty, uncertainty, and risk.
2. Define and measure uncertainty.
3. Define and propose ways to measure risk.
4. Apply classical decision criteria.
5. Develop utility functions and use them in decision-making.
6. Relate risk to the decision maker's utility function.
1
 7. Apply Bayesian decision-making approach to decision problems.
8. Evaluate the value of perfect and imperfect information.
9. Formulate multi-criteria decision problems.
10. Select and apply a multi-objective approach to multi-criteria decision-making.

Grade Distribution: Assignments 10% Week 05, Wednesday; Week 10, Monday; Week 14, Wednesday
(Tentative) Major I 20% Week 05, Wednesday
Major II 20% Week 10, Monday
Final Exam 20% TBA by the registrar
Project 30% Presentations and Term Project

Course Outline: Topic Chapter Week (Lecture/s)

Introduction to Decision Analysis 1 1 (M, W)
Elements of Decision Problems 2 2 (M)
Decision Trees 3 and 4 2 (W), 3 (M)
Decisions Under Uncertainty (Non-Stochastic
Handout 3 (W)
Decision Criteria)
Decisions Under Risk (Stochastic Decision Criteria) Handout 4 (M, W)
Decisions Under Risk (Stochastic Dominance) Handout 5 (M)
Major I 5 (W)
Subjective Probability 8 6 (M, W)
Value of Information 12 7 (M, W)
Risk Attitudes 13 8 (M, W)
Utility Axioms and Paradoxes 14 9 (M, W)
Major II 10 (M)
MCDM: TOPSIS Handout 11 (M, W)
MCDM: AHP Handout 12 (M, W)
MCDM: ELECTRE Handout 13 (M, W)
MCDM: PROMETHEE Handout 14 (M, W)
Project Presentations 15 (M, W)