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6.2Operations research, IE & decision-making
Covers the quantitative tools for evaluating and choosing among alternatives—decision trees (decision-making by expected value), PERT/CPM (critical path and schedule shortening), linear programming, inventory management (EOQ), queueing, and the pitfalls of correlation and regression—so an IT strategist can wield them when judging investment plans and schedules.
An IT strategist must choose, from among multiple investment plans, schedules, and procurement options, the one that yields the greatest effect with limited resources—on a quantitative basis. Operations research (OR) and industrial engineering (IE) are the toolbox for this. This section covers, through settings where you actually compute and choose an alternative, the quantitative methods that support management decision-making: decision trees (decision-making by expected value) for choosing under uncertainty, PERT/CPM for spotting a project's earliest completion and the activity to shorten, linear programming for optimizing resource allocation, inventory management (EOQ) for optimizing order quantity, and the judgment of not mistaking correlation for causation.
6.2.1Decision-making by expected value (decision trees)
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