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Utility Model for Minimizing Risk. Chandru Mirchandani Lockheed-Martin August 9, 2004. MIRCHANDANI. 1. P115/MAPLD2004. Introduction. To meet… System Objectives Develop a Model to accept… Reduced Capability Alternatives for Implementation By developing a Utility Model….

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Utility model for minimizing risk

Utility Model for Minimizing Risk

Chandru Mirchandani

Lockheed-Martin

August 9, 2004

MIRCHANDANI

1

P115/MAPLD2004


Introduction
Introduction

  • To meet…

    • System Objectives

  • Develop a Model to accept…

    • Reduced Capability

    • Alternatives for Implementation

  • By developing a Utility Model….

MIRCHANDANIMIRCHANDANI

2

P115/MAPLD2004


Problem statement
Problem Statement

  • Requirement: Display sensor data in near-real time

  • Constraints: Within Cost and Schedule and acceptable Quality

  • Information: Uncertain…to make a selection with lowest risk of failure

    Solution………...Utility Model

MIRCHANDANI

3

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Conceptual framework
Conceptual Framework

  • Develop Criteria for System Acceptance

  • Rank Attributes in order of preference

  • Evaluate Attributes with respect to meeting objectives

  • Quantify evaluations based on measurable metrics

MIRCHANDANI

4

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Option 1
Option 1

  • Software solution to extract and display data……..

  • S1 = Data Source

  • S2 = Ingest System

  • S3 = Storage System

  • S4 = Data Processor (S4-A)

  • S5 = Data Display Processor (S5-A)

MIRCHANDANI

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Option 2
Option 2

  • Hardware solution to extract data and Software solution to display data……..

  • S1 = Data Source

  • S3 = Storage System

  • S4 = Data Processor (S4-B)

  • S5 = Data Display Processor (S5-B)

MIRCHANDANI

6

P115/MAPLD2004


Option 3
Option 3

  • Hardware solution to extract data and display data……..

  • S1 = Data Source

  • S3 = Storage System

  • S4 = Data Processor (S4-B)

  • S5 = Data Display Processor (S5-B)

MIRCHANDANI

7

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Methodology
Methodology

  • Select weighting for the success or failure criteria based on criticality

  • Evaluate cost based on Re-Engineering, Implementation and Schedule

  • Evaluate cost of failure based on Loss of Performance and Requirements

  • Evaluate the Probability of Success and Failure

  • Factor in the Uncertainty in Evaluation

MIRCHANDANI

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Metrics
Metrics

  • Expected Value of Success

MIRCHANDANI

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Decision tree
Decision Tree

Decision Point

MIRCHANDANI

10

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Uncertainty
Uncertainty

  • Uncertainty in how ‘good’ or ‘bad’ is the evaluation

  • Probability of Success or Failure based on the Uncertainty

MIRCHANDANI

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Value function
Value Function

  • Based on Success of the Option

    If Option S is successful……

    Value (S) = w(x1 + x2+ x3+ x4+ x5+ x6+ x7)/7 = Ss

    If Option S Fails………..

    Value (F) = 1 - w(x1 + x2+ x3+ x4+ x5+ x6+ x7)/7 = Sf

    ………….together with metrics

MIRCHANDANI

12

P115/MAPLD2004


Measures
Measures

  • Cost of Success = Css

    = 8T + 30(C+T)

  • Cost of Failure = REsf(p,r,c,t) = Xsf(C+T)

    = 0.529(C+T)

MIRCHANDANI

13

P115/MAPLD2004


Utility function
Utility Function

For Option A:

SS = U(x1, x2, x3, x4, x5, x6, x7) = Css

= 8T + 30(C+T)

and,

SF = U(x1, x2, x3, x4, x5, x6, x7) + REsf(p,r,c,t)

= Css + REsf(p,r,c,t)

= 8T + 30(C+T) + Xsf(C+T)

= 8T + 30(C+T) + 0.529(C+T)

MIRCHANDANI

14

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Decision process
Decision Process

SgYgHg = Probability of Options 1, 2 and 3 all being correctly evaluated

P(success with S|Sg)

=

= 0.62

MIRCHANDANI

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P115/MAPLD2004


Decision table
Decision Table

MIRCHANDANI

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Utility function1
Utility Function

  • At each node in the tree, the Decision Maker selects the minima

  • Finally at the Decision Point the optimal choice is quantitatively provided

MIRCHANDANI

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P115/MAPLD2004


Summary
Summary

  • Tree can be expanded to accommodate more options

  • Framework can be expanded to include intermediate decision points

  • Decision points can be analyzed in a dependent manner

  • Re-evaluation at a node can be enhanced using additional attributes

MIRCHANDANI

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P115/MAPLD2004


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