Dynamic Strategic Planning II
June, 2001
Tokyo

Course Overview:

Dynamic Strategic Planning II will focus on the development of a business case involving the launching of a new business venture for which decisions must be made about the business size and product prices. The case will integrate the major analysis techniques covered in both DSP I and II with an emphasis on cost modeling and decision analysis.

The course will consist of a review of the materials covered in DSP I including decision trees, probability assessment/Bayes Theorem, value of information and cost estimation. 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 review topics from DSP I, and introduce new topics relevant to both the case assignment and the general topic of strategic planning and decisionmaking. The problem sessions will be aimed at solving problems related to the topics addressed in the lectures. The working sessions will be primarily aimed at developing the business case.

Pre-course Assignments:

  1. Read Process Based Cost Modeling: Understanding the Economics of Technical Decisions paper.
  2. Prepare basic information for business case. Investigate some preliminary options for new business ventures to be explored in the case assignment. Gather data on how the manufacturing process used to produce the product, the costs of the main elements of its production and some basic market information including the prices of competing products. Hint: the main decisions to be made in the case assignment will involve the size of the manufacturing facility and the price to be charged for the product. In order for this particular analysis to fit with your business case, your product should have the following features: (1) there should be manufacturing economies of scale (relatively high fixed costs) and (2) the market should be price sensitive.

Course Schedule:
Date Lectures Problem Session Working Session
Sat. June 9: Course Introduction

Technical Cost Modeling

General Model Development & Examples Student Cost Models
Mon. June 11: Review of Decision Trees Decision Tree Problems Cost Model Development (continued)
Tues. June 12: Review of Probability Assessment/Bayes Theorem Decision Tree/Bayes Theorem Problems Detailed Discussion of Case Assignment
Wed. June 13: Value of Information (Perfect & Sample Information) Information Problems Market Analysis for Case Assignment
Thurs. June 14: Value & Utility Functions EXAM Case Decision Variables & Decision Tree
Fri. June 15: Utility Assessment Methods Review of Exam Decision Analysis for Period One
Sat. June 16: Multi-attribute Utility Analysis Decision Analysis for Period Two Presentations of Business Cases

Course Materials:

  1. Overview Materials (new) - PPT, PDF
  2. DSP Lecture Materials (new) - PPT, PDF
  3. Cost Modeling Lecture Materials
  4. Choice of Discount Rate
  5. Value Functions
  6. Utility Functions
  7. Utility Assessment
  8. Multi-Attribute Utility
  9. Applications of MAUA
  10. Reading Materials

  • Software