1、Chapter 2 PowerPoint,MODELING IN A PROBLEM-SOLVING FRAMEWORK,Modelers Roles in the Problem-Solving Process,End user Identifies problems, develops model, uses model, and implements results Often the modeler Team member Communication skills critical Whole team must understand model and assumptions Ind
2、ependent consultant Model is for a client Model must be consistent with clients goals,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,2,KEY TERMS: “PROBLEM” VERSUS A “MESS”,A problem is a well-defined situation that is capable of resolution. A mess is a morass of unsettling symptoms, causes, data,
3、pressures, shortfalls, opportunities, etc. Identifying a problem in the mess is the first step in the creative problem solving process.,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,3,Problem Statements,A statement in the form “In what ways might?” Focuses on defining the problem to be solved Exa
4、mple: “In what ways might we increase revenues to keep pace with costs?” Solutions will differ based on the problem statement, so: Pay close attention to the problem definition. Take any problem definition as tentative. Prepare to alter the definition if evidence suggests a different statement would
5、 be more effective.,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,4,Characteristics of Well-Structured Problems,The objectives of the analysis are clear. The assumptions that must be made are obvious. All the necessary data are readily available. The logical structure behind the analysis is well
6、understood. Example: Algebra problems are typically well- structured problems.,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,5,Ill-Structured Problems,Objectives, assumptions, data, and structure of the problem are all unclear. Examples: Should the Red Cross institute a policy of paying for blood
7、 donations? Should Boeings next major commercial airliner be a small supersonic jet or a slower jumbo jet? Should an advertiser spend more money on the creative aspects of an ad campaign or on the delivery of the ad? How much should a mid-career executive save out of current income toward retirement
8、? Require exploration more than solutions.,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,6,Exploration,With an inquiring mind and a spirit of discovery, exploration involves: formulating hypotheses making assumptions building simple models deriving tentative conclusions It often reveals aspects o
9、f the problem that are not obvious at first glance.,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,7,Divergent and Convergent Thinking,Divergent thinking Thinking in different directions Searching for a variety of answers to questions that may have many right answers Brainstorming Convergent think
10、ing Directed toward achieving a goal or single solution Involves trying to find the one best answer Emphasis shifts from idea generation to evaluation Decision makers need to be clear as to which they use at a given time, and balance the two.,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,8,The Si
11、x-Stage Problem-Solving Process,1. Exploring the mess Divergent phase Search the mess for problems and opportunities. Convergent phase Accept a challenge and undertake systematic efforts to respond to it. 2. Searching for information Divergent phase Gather data, impressions, feelings, observations;
12、examine the situation from many different viewpoints. Convergent phase Identify the most important information. 3. Identifying a problem Divergent phase Generate many different potential problem statements. Convergent phase Choose a working problem statement.,Chapter 2,Copyright 2013 John Wiley & So
13、ns, Inc.,9,THE SIX-STAGE PROBLEM-SOLVING PROCESS (CONTD),4. Searching for solutions Divergent phase Develop many different alternatives and possibilities for solutions. Convergent phase Select one or a few ideas that seem most promising. 5. Evaluating solutions Divergent phase Formulate criteria for
14、 reviewing and evaluating ideas. Convergent phase Select the most important criteria; use them to evaluate, strengthen, and refine ideas.6. Implementing a solution Divergent phase Consider possible sources of assistance and resistance to proposed solution. Identify implementation steps and required
15、resources. Convergent phase Prepare the most promising solution for implementation.,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,10,Example: Invivo Diagnostics,A $300M pharmaceutical company built on the strength of a single product that accounts for over 75% of revenues. In 18 months, the paten
16、t for this product will expire. The CEO wants to explore ways to plug the expected $100-$200M revenue gap as revenues from this product decline.,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,11,1. Exploring the Mess,What problems or opportunities do we face? Where is there a gap between the curre
17、nt situation and the desired one? What are the stated and unstated goals? This stage is complete when we have: A description of the situation Identified (not gathered) key facts and data,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,12,2. Searching for Information,What are the symptoms and causes
18、? What measures of effectiveness seem appropriate? What actions are available? This stage is complete when we have: Found and organized relevant data Made initial hypotheses about problem causes and solutions,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,13,3. Identifying a Problem,Which is the m
19、ost important problem? Is this problem like others we have dealt with? What are the consequences of a broad versus narrow problem statement? This stage is complete when we have produced a working problem statement.,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,14,4. Searching for Solutions,What d
20、ecisions are open to us? What solutions have been tried in similar situations? How are the various candidate solutions linked to outcomes of interest? This stage is complete when we have produced a list of potential solutions. Perhaps also a list of advantages and disadvantages,Chapter 2,Copyright 2
21、013 John Wiley & Sons, Inc.,15,5. Evaluating Solutions,How does this solution impact each of the criteria? What factors within our control could improve the outcomes? What factors outside our control could alter the outcomes? This stage is complete when we have produced a recommended course of actio
22、n along with justification.,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,16,6. Implementing a Solution,What are the barriers to successful implementation? Where will there be support and motivation, or resistance and conflict? Are the resources available for successful implementation? This stage
23、 is complete when we have produced an implementation plan and begun execution.,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,17,Mental Models (Informal Modeling),Help us to relate cause and effect But often in a simplified, incomplete way Help us determine what is feasible But may be limited by p
24、ersonal experiences Are influenced by our preferences for certain outcomes Are useful but can be limiting Problem solvers construct quick, informal mental models at many different points in the process.,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,18,Formal Models,Provide the same kind of inform
25、ation as mental models Link causes to effects, aid in evaluating solutions Require a set of potential solutions and criteria to compare solutions to be identified More costly and time consuming to build than mental models Make assumptions, logic, and preferences explicit and open to debate,Chapter 2
26、,Copyright 2013 John Wiley & Sons, Inc.,19,Influence Charts,A simple diagram to show outputs and how they are calculated from inputs Tool of choice for complex, unstructured problems Identifies main elements of a model Delineates the boundaries of a model Recommended for early stages of any problem
27、formulation task Flexible, support frequent revision,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,20,Building an Influence Chart,Built from right to left Conventions on types of variables Outputs hexagons Decisions boxes Inputs triangles Other variables circles Random variables double circles Se
28、e Figure 2.3,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,21,Figure 2.3,Influence Chart Principles,Start with outcome measure Decompose outcome measure into independent variables that directly determine it Repeat decomposition for each variable in turn Identify input data and decisions as they a
29、rise Ensure each variable appears only once Highlight special types of elements with consistent symbols,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,22,Example 1: A Pricing Decision,“Determine the price we should set for our product so as to generate the highest possible profit this coming year.
30、”See Figures 2.2a 2.2f,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,23,EXAMPLE 1: A PRICING DECISION,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,24,EXAMPLE 1: A PRICING DECISION,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,25,EXAMPLE 1: A PRICING DECISION,Chapter 2,Copyright 2013 John W
31、iley & Sons, Inc.,26,EXAMPLE 2: THE SS KUNIANG1,In the early 1980s, New England Electric System (NEES) was deciding how much to bid for the salvage rights to a grounded ship, the SS Kuniang. If the bid were successful, the ship could be repaired and outfitted to haul coal for the companys power-gene
32、ration stations. But the value of doing so depended on the outcome of a U.S. Coast Guard judgment about the salvage value of the ship. See Figure 2.6,1D. E. Bell, “Bidding for the S.S. Kuniang,” Interfaces 14 (1984): 1723.,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,27,Example 3: Automobile Lea
33、sing,The primary challenge for companies offering a closed-end lease is to select the residual value of the vehicle. See Figure 2.7,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,28,Influence Charts Wrap-up,The goal is to develop a problem structurenot to solve the problem. There is no one correct
34、 chart. Charts ignore all available numerical data. Charts rely on modeling assumptions that should be recorded as made.,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,29,Craft Skills for Modeling,Successful modelers draw on both technical and craft skills Technical skills Lead to a single correct
35、 answer Require no creativity, learned quickly Example: Calculating present values Craft skills Do not lead to a single answer Example: Designing a prototype,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,30,Characteristics of Craft Skills,Do not lead to a single answer Require creativity Harder t
36、o define and teach Develop slowly over time Involve modeling heuristics,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,31,Modeling Heuristics,Simplify the problem Break the problem into modules Build a prototype and refine it Sketch graphs of key relationships Identify parameters and perform sensi
37、tivity analysis Separate the creation of ideas from their evaluation Work backward from the desired answer Focus on model structure, not data collection,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,32,Simplify the Problem,“Model simple, think complicated” Simplification The essence of modeling I
38、ncreases transparency - aids with buy-in Requires a focus on key connections and central trade-offs Involves making assumptions,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,33,Break the Problem Into Modules,Keep components as independent as possible. Each component is simpler to deal with than t
39、he whole. Development of components provides structure to the modeling process.,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,34,Build a Prototype and Refine It,A prototype is a working model. It should: Take data and inputs from the user Produce key outputs in response A prototype: Will be refin
40、ed later Is, by definition, simple,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,35,Characteristics of a Completed Prototype,The problem is decomposed into modules. We have built a simple model for each module. The modules work together to produce results. We have provided a tentative answer to t
41、he clients major questions.,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,36,Prototypes,Keep the entire problem in the mind of the modeler Provide a roadmap for future work Support sensitivity analysis Where would my model benefit most from additional work?,Chapter 2,Copyright 2013 John Wiley & S
42、ons, Inc.,37,Sketch Graphs of Key Relationships,Graphs express relationships visually Not mathematically or verbally Allows for looking at a problem from different viewpoints Externalizes the analysis Moves it from the mind to an external artifact (the graph),Chapter 2,Copyright 2013 John Wiley & So
43、ns, Inc.,38,Visualization of the Modeling Process,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,39,Useful Functions for Modeling,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,40,Identify Parameters and Perform Sensitivity Analysis,Price1 and Price2 below represent a family of relations. Price1
44、 = a b*(Quantity) Price2 = a*(Quantity)b (b1) a and b are the parameters of these models. Sensitivity analysis Determines plausible ranges for the parameters Tests the impact of parameter values on model outputs Parameterization builds links between our rational knowledge and our intuition.,Chapter
45、2,Copyright 2013 John Wiley & Sons, Inc.,41,Separate the Creation of Ideas From Their Evaluation,Many modelers prefer judging ideas over generating them. To “quiet the critical voice”: Separate periods of divergent and convergent thinking. Initiate a brainstorming session; remind participants not to
46、 criticize ideas of others. Realize that mistakes and blind alleys are part of the modeling process.,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,42,Work Backward From the Desired Answer,Start with the form the answer will take. Work backward to select model and analysis to generate the chosen r
47、esult. The “PowerPoint heuristic” What should be on one summary slide that contains the essential message (e.g., a number, a table, a chart)?,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,43,Focus on Model Structure, Not on Data Collection,Novice modelers spend a high proportion of time on data.
48、Expert modelers spend most of their time on model structure.,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,44,Mistaken Beliefs of Novice Modelers,The available data is the information needed in the modeling process. Obtaining data moves the process forward. More data improves the quality of the f
49、inal recommendations.,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,45,Common Sources of Biases and Errors in Empirical Data,Sampling error Differences in purpose Masking Inappropriateness Definitional differences,Chapter 2,Copyright 2013 John Wiley & Sons, Inc.,46,Expert Modelers Attitudes Towards Data,Treat data skeptically Realize that even good data may not be relevant for the model Realize that data collection can be distracting and limiting Build the model structure first and then use data to refine it,
