In particular, the course will cover three major topics; (1) cost estimation techniques, (2) decision analysis and (3) utility analysis. Cost estimation will focus on the use of a technique called technical cost modeling. These are process based cost analyses that track the individual elements of cost that arise as a result of the physical requirements of a manufacturing process. Decision analysis will primarily be addressed through the use of decision trees and will include related topics such as probability assessment (bayes theorem & likelihood ratios) and the value of information. Additional topics such as utility and value functions and multi-attribute utility analysis will also be addressed.
Classes will generally be divided into three segments; lectures, problem sessions and working sessions. The lectures are designed to introduce topics in cost assessment and decision analysis as well as to provide the students with the theoretical background needed to evaluate their business case. Problem sessions will involve of these techniques in order to reinforce the student's understanding of the most relevant concepts and to ensure they are able to apply the theories to practical situations. The working sessions will be primarily aimed at developing the business case, and will include time spent developing cost estimation tools and determining the most important parameters for the decision analysis problem.
Pre-course Assignments:
There are two distinct assignments for all students to complete BEFORE
the beginning of the first class. One assignment concerns decision
analysis and the other concerns cost estimation and the business case.
Course Schedule:
Date | Lectures | Problem Session | Working Session |
Mon. Nov. 12: | Course Introduction
Technical Cost Modeling |
General Model Development & Examples | Student Cost Models
Discussion of Business Case Assignment |
Tues. Nov. 13: | Decision Analysis/Decision Trees | Review of Pre-Assignment/
Decision Tree Problems |
Cost Model Development |
Wed. Nov. 14: | Probability Assessment/Bayes Theorem | Decision Tree
Bayes Theorem Problems |
Market Analysis & Decision Variables for Business Case Assignment |
Thurs. Nov. 15: | Value of Information
(Perfect & Sample Information) |
Information Problems | Business Case Decision Tree
Decision Analysis for Period One |
Fri. Nov. 16: | Utility Analysis | Review of Case Studies | Decision Analysis for Period Two |
Sat. Nov. 17: | Presentation of Business Cases |
Course Materials: