As you have examined this week, healthcare administration leaders are expected to exercise decision making under conditions of uncertainty. Perhaps more so than any other business, healthcare administration leaders face multiple challenges since ineffective business practices might not result in poor performance with their bottom lines and, if not, it might negatively impact patient safety. Understanding how to appropriately exercise decision making under conditions of uncertainty is a useful skill for effective healthcare administration practice.
For this Assignment, review the resources for this week, and reflect on how healthcare administration leaders must exercise decision making under conditions of uncertainty. Consider how you might engage in decision making under uncertainty, as you complete the Assignment and the Case Study 6.4 on pages 275-276 of your course text.
The Assignment: (3–5 pages)
Complete Case Study 6.4 (Developing a Helicopter Component for the Army) on pages 275-276 of your course text.
Hi,
Please be sure that the Excel analysis is a Microsoft Word management report.
Please see the resources attached and below:
Albright, S. C., & Winston, W. L. (2017). Business analytics: Data analysis and decision making (6th ed.). Stamford, CT: Cengage Learning.
Chapter 6, “Decision Making Under Uncertainty”
Below is the link to get the PrecisionTree add-in from the Decision tools suite from Pallisade to complete the Week 3 Assignment. Click the link on the right of the page for the tools, then click the book. Once you get to the next page, you have to fill out information located on the right of the form to receive the download link. Please note that this download site will only work if you purchased a new text for this course. Additionally, you may need to use a personal email address in order to receive the download successfully.
https://www.cengage.com/cgi-wadsworth/course_produ…
Running head: DECISION MAKING UNDER UNCERTAINTY
1
Decision Making Under Uncertainty
Student’s Name
Institutional Affiliation
DECISION MAKING UNDER UNCERTAINTY
2
Decision Making Under Uncertainty
As a discipline, healthcare is a sector that requires timely decision-making even in
uncertainty or lack of scientific knowledge. It often is problematic to healthcare practitioners, but
experience on how to assess the success probability is often advantageous as it places one at an
advantaged position, where they can estimate the damage or success of decision made.
Uncertainty is a common element in many fields and for health workers, reclining from making a
decision is never an option, as they are, at times, pushed by time and circumstance to the corner.
Therefore, a good health practitioner knows how best to assess a situation and make a decision
within a short time frame. Decisions made in uncertainty are where there are unknown future
consequences present decisions, whether or not they will succeed, and health workers need to
learn skills to filter out relevant information and narrow down details and make sound decisions
within a small time frame.
Uncertainty in the medical field is a concept understood by few since there has been
emphasis made on evidence-based care, shared decision making, and availability of resources
within reach of many. However, the conditions surrounding a patient are never standard, and the
decisions made may vary. More so, the variance is more significant I situations that are unknown
or that the physician is unfamiliar with. On the brighter side, it is uncertainty that fuels research,
which is the foundation of significant medical advances. It has been used to motivate researchers
and pushed them to ask questions and find solutions and explanations of anomalies or concepts
outside our normalcy (Engebretsen, Heggen, Wieringa & Greenhalgh, 2016). However, it causes
a hard time for policy-makers within the healthcare facility as they lack a stable foundation to
base their arguments. The paper will address a case of uncertainty in Ventron Engineering
DECISION MAKING UNDER UNCERTAINTY
3
Company, an organization with a contract for supplying the army with a functional helicopter
blade. The methods to be used are different, each with its outcome. Assessment and
mathematical computations will help conclude which method is the better option, eliminating
assumptions and uncertainties.
Scholars generally agree that decision making under uncertainty pertains to a situation
whereby there are numerous unknowns, and without the potentiality of one knowing what might
occur. Similarly, when a decision-maker is alive to the disparate possible situations of nature but
possesses inadequate information to allot any prospects of circumstance to them, it is therefore
referred to as deciding under uncertainty. Ventron Engineering Company faces a similar
situation, whereby they have been awarded a development contract that does not allow them to
back out of the deal. They are, therefore, at a point where they need to make decisions under
uncertainty. As such, it suffices it to say, forced between developing a blade spar either through
sectioning or the ameliorated extrusion process, Ventron Engineering Company is accosted by
the decision problem in the context of uncertainty.
Expected Monetary Value
Method applied
Sectioning
Improved Extrusion Process
Contract Price
2,000,000
2,000,000
DECISION MAKING UNDER UNCERTAINTY
4
Cost
1,800,000
1,260,000
Difference
200,000
740,000
0
600,000
200,000
140,000
Profit if no failure occurs
Additional cost IF the Improved
Extrusion Fails
Net profit if Improved Extrusion
Process fails
The Ventron Engineering Company has been awarded a $2 million contract to develop a
blade spar to be used by the US Army Aviation Systems. However, the organization is to settle
on the best decision to manufacture the blades, each equating to a year. The sectioning method
will cost a total of $1.8 million, with a higher probability of success. The extrusion process, the
alternative, is forked into two main stages, each taking six months. The success of the first stage
determines that of the second, with a lower aggregate success probability. The cost of this
method will be $0.3 million and $0.96 million, respectively, with a probability ration of 0.9 and
0.75. From the two situations at hand, if the organizations settled for the second option,
extrusion, and after completion, realized that the blades were faulty, they would incur an
additional cost of $0.6 million. However, despite all that, the process will still be profitable. It
will be equal to $2 million as per the best estimate. Considering that the profit of success is also
DECISION MAKING UNDER UNCERTAINTY
5
high for the first step, at 0.9, it is a good decision to settle for extrusion compared to the
sectioning method.
There is an indifference between the two methods if the additional benefits are less than
$0.6 million. From the calculations done, 140k + 60k = 200k. It is equal to profits obtained from
sectioning.
DECISION MAKING UNDER UNCERTAINTY
6
References
Engebretsen, E., Heggen, K., Wieringa, S., & Greenhalgh, T. (2016). Uncertainty and objectivity
in clinical decision making: a clinical case in emergency medicine. Medicine, Health
Care And Philosophy, 19(4), 595-603. doi: 10.1007/s11019-016-9714-5
Running head: DECISION MAKING UNDER UNCERTAINTY
1
Decision Making Under Uncertainty
Student’s Name
Institutional Affiliation
DECISION MAKING UNDER UNCERTAINTY
2
Decision Making Under Uncertainty
As a discipline, healthcare is a sector that requires timely decision-making even in
uncertainty or lack of scientific knowledge. It often is problematic to healthcare practitioners, but
experience on how to assess the success probability is often advantageous as it places one at an
advantaged position, where they can estimate the damage or success of decision made.
Uncertainty is a common element in many fields and for health workers, reclining from making a
decision is never an option, as they are, at times, pushed by time and circumstance to the corner.
Therefore, a good health practitioner knows how best to assess a situation and make a decision
within a short time frame. Decisions made in uncertainty are where there are unknown future
consequences present decisions, whether or not they will succeed, and health workers need to
learn skills to filter out relevant information and narrow down details and make sound decisions
within a small time frame.
Uncertainty in the medical field is a concept understood by few since there has been
emphasis made on evidence-based care, shared decision making, and availability of resources
within reach of many. However, the conditions surrounding a patient are never standard, and the
decisions made may vary. More so, the variance is more significant I situations that are unknown
or that the physician is unfamiliar with. On the brighter side, it is uncertainty that fuels research,
which is the foundation of significant medical advances. It has been used to motivate researchers
and pushed them to ask questions and find solutions and explanations of anomalies or concepts
outside our normalcy (Engebretsen, Heggen, Wieringa & Greenhalgh, 2016). However, it causes
a hard time for policy-makers within the healthcare facility as they lack a stable foundation to
base their arguments. The paper will address a case of uncertainty in Ventron Engineering
DECISION MAKING UNDER UNCERTAINTY
3
Company, an organization with a contract for supplying the army with a functional helicopter
blade. The methods to be used are different, each with its outcome. Assessment and
mathematical computations will help conclude which method is the better option, eliminating
assumptions and uncertainties.
Scholars generally agree that decision making under uncertainty pertains to a situation
whereby there are numerous unknowns, and without the potentiality of one knowing what might
occur. Similarly, when a decision-maker is alive to the disparate possible situations of nature but
possesses inadequate information to allot any prospects of circumstance to them, it is therefore
referred to as deciding under uncertainty. Ventron Engineering Company faces a similar
situation, whereby they have been awarded a development contract that does not allow them to
back out of the deal. They are, therefore, at a point where they need to make decisions under
uncertainty. As such, it suffices it to say, forced between developing a blade spar either through
sectioning or the ameliorated extrusion process, Ventron Engineering Company is accosted by
the decision problem in the context of uncertainty.
Expected Monetary Value
Method applied
Sectioning
Improved Extrusion Process
Contract Price
2,000,000
2,000,000
DECISION MAKING UNDER UNCERTAINTY
4
Cost
1,800,000
1,260,000
Difference
200,000
740,000
0
600,000
200,000
140,000
Profit if no failure occurs
Additional cost IF the Improved
Extrusion Fails
Net profit if Improved Extrusion
Process fails
The Ventron Engineering Company has been awarded a $2 million contract to develop a
blade spar to be used by the US Army Aviation Systems. However, the organization is to settle
on the best decision to manufacture the blades, each equating to a year. The sectioning method
will cost a total of $1.8 million, with a higher probability of success. The extrusion process, the
alternative, is forked into two main stages, each taking six months. The success of the first stage
determines that of the second, with a lower aggregate success probability. The cost of this
method will be $0.3 million and $0.96 million, respectively, with a probability ration of 0.9 and
0.75. From the two situations at hand, if the organizations settled for the second option,
extrusion, and after completion, realized that the blades were faulty, they would incur an
additional cost of $0.6 million. However, despite all that, the process will still be profitable. It
will be equal to $2 million as per the best estimate. Considering that the profit of success is also
DECISION MAKING UNDER UNCERTAINTY
5
high for the first step, at 0.9, it is a good decision to settle for extrusion compared to the
sectioning method.
There is an indifference between the two methods if the additional benefits are less than
$0.6 million. From the calculations done, 140k + 60k = 200k. It is equal to profits obtained from
sectioning.
DECISION MAKING UNDER UNCERTAINTY
6
References
Engebretsen, E., Heggen, K., Wieringa, S., & Greenhalgh, T. (2016). Uncertainty and objectivity
in clinical decision making: a clinical case in emergency medicine. Medicine, Health
Care And Philosophy, 19(4), 595-603. doi: 10.1007/s11019-016-9714-5