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Topic 11: Decision Making
Sometimes we make decisions using information involving uncertainty, such as future
weather conditions. In this topic, we will consider decisions based on information we already
know, or can find. These types of decisions are called decisions under certainty.

Give an example of a decision under certainty:
Purchasing food at a food booth.

Give an example of a decision not under certainty:
Choosing between investment options which are based on stock values.

Many times, decisions under certainty involve several criteria.

One method we can use to help decide is the cutoff screening method. Here, the decision
maker predetermines a cutoff for each criterion. Then, the decision maker goes through each
criteria and eliminates any choices that don't meet the cutoff. If more than one choice
remains, the decision maker could consider additional criteria or restrict the cutoffs. If all
choices have been eliminated, the decision maker can relax the cutoffs.

Another method to handle decisions under certainty with multiple criterion is the weighted
sum method. In it, an "importance factor," or weight, is assigned to each criterion, and a
rating is set up within each criterion.

The ratings within each criteria should be consistent, and typically the highest rating used is
10. Similarly, a weight of 10 is assigned to the most important criterion, and the remaining
weights will be assigned relative to the most important.

Finally, a weighted sum will be calculated for each case. This will result in a single numerical
rating, with the highest weighted sum giving the preferred choice.

Term used in a situation when for each decision alternative there is only one event and
therefore only one outcome for each action. For example, there is only one possible event
for the two possible actions: "Do nothing" at a future cost of $3.00 per unit for 10,000 units,
or "rearrange" a facility at a future cost of $2.80 for the same number of units. A decision
matrix (or payoff table) would look as follows:

Note that there is only one state of nature in the matrix because there is only one possible
outcome for each action (with certainty). The decision is obviously to choose the action that
will result in the most desirable outcome (least cost), that is to "rearrange." See also decision
theory.

Read more: http://www.answers.com/topic/decision-making-under-certainty#ixzz29qdkzNjX

What is an unbalanced problem
Often, you will get a transportation problem where the total supply does not equal the total demand. For

example, in the table below.

Warehouse 1 Warehouse 2 Warehouse 3 Supply
Bakery 1 5 8 4 7
Bakery 2 7 2 8 10
Demand 6 8 9

The total demand exceeds the total supply, so clearly, not all warehouses will get their total order.

'Dummy' Dealers and Suppliers
In cases where you have unbalanced problems, this is solved by introducing a dummy supplier or dealer which

can meet the excess. Clearly, they will not really be able to supply or take in loaves of bread, but we can make

this adjustment at the end.

Warehouse 1 Warehouse 2 Warehouse 3 Supply
Bakery 1 5 8 4 7
Bakery 2 7 2 8 10
Dummy 0 0 0 6
Demand 6 8 9

It costs nothing to transport to and from the dummy, because it doesn't really exist. You can now use the

algorithms and formulate linear programming problems as you did before.

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