Applications of Decision Analysis to the U. S. Army Affordability Study
DECISIONS AND DESIGNS INC MCLEAN VA
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This report describes several applications of decision analysis to the Armys Affordability Study. These applications are focused on the allocation of resources to support the requirements, concepts, plans and programs of the Army. Decision analysis is a quantitative procedure for systematic evaluation of the alternative available to a decision maker. Decision-analytic techniques are used to structure a decision problem into clearly defined components, so that all options, outcomes, values, and probabilities are depicted. Decision analysis is first applied in cost-benefit analysis to rank the Army Program Development Increment Packages and Program Analysis Resource Review issues. The cost-benefit process involves quantifying the relative benefits and costs of each program. Since the purpose of prioritization is to determine the allocation of money to a discrete number of programs, the quantification of benefit is done according to an Army mission value system, not according to a monetary value system. Once the benefits have been quantified, the programs can be prioritized from the most cost-beneficial benefit per dollar to least. Multi-attribute utility analysis is the second decision-analytic technique investigated in this study. A multi-attribute utility model is hierarchical in nature, as the top-level factor in the analysis is successively divided at the bottom of the heirarchy. Multi-attribute utility analysis can be used in the relative evaluation of mission capabilities to develop a framework that sponsors could use to scale the benefits of their programs.
- Administration and Management
- Economics and Cost Analysis
- Numerical Mathematics