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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. 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

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  1. Utility Model for Minimizing Risk Chandru Mirchandani Lockheed-Martin August 9, 2004 MIRCHANDANI 1 P115/MAPLD2004

  2. Introduction • To meet… • System Objectives • Develop a Model to accept… • Reduced Capability • Alternatives for Implementation • By developing a Utility Model…. MIRCHANDANIMIRCHANDANI 2 P115/MAPLD2004

  3. 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 P115/MAPLD2004

  4. 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 P115/MAPLD2004

  5. 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 5 P115/MAPLD2004

  6. 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

  7. 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 P115/MAPLD2004

  8. 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 8 P115/MAPLD2004

  9. Metrics • Expected Value of Success MIRCHANDANI 9 P115/MAPLD2004

  10. Decision Tree Decision Point MIRCHANDANI 10 P115/MAPLD2004

  11. Uncertainty • Uncertainty in how ‘good’ or ‘bad’ is the evaluation • Probability of Success or Failure based on the Uncertainty MIRCHANDANI 11 P115/MAPLD2004

  12. 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

  13. 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

  14. 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 P115/MAPLD2004

  15. Decision Process SgYgHg = Probability of Options 1, 2 and 3 all being correctly evaluated P(success with S|Sg) = = 0.62 MIRCHANDANI 15 P115/MAPLD2004

  16. Decision Table MIRCHANDANI 16 P115/MAPLD2004

  17. 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 17 P115/MAPLD2004

  18. 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 18 P115/MAPLD2004

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