Topics
The everyday running a company is often what separates success from failure. Innovations, as well as well established companies, even when well funded, can fail if operations are not well planned and carried out. A major issue when planning operations is the handling of uncertainty; Short-term uncertainty in demand, price, transit times or the weather, as well as longer-term uncertainties from regulation, competition or other external or internal factors. Without uncertainty, planning and management would be rather simple. Some uncertainty can be handled financially, but most cannot. The following topics will be discussed:
- The relationship between strategic, tactical and operational decisions when handling uncertainty.
- Our intuitive understanding of uncertainty from behavioral psychology.
- What makes a decision (or the principles behind it) right? How can we say that an approach is incorrect?
- Why what-if analysis (scenario analysis) does not work.
- The concepts of real options, regret and other alternatives to utility theory.
- The dynamics of decisions; what is known when?
- The role of luck in decision-making.
- The IQ of hindsight.
- The value of information - what can we use if for?
- The role of reactive and proactive decision rules. How can we measure the difference?
- The role of rolling horizon approaches.
- There will be many guest lectures discussing operational risk management across industries.
The course will not use complicated tools, only provide an understanding of what the tools actually provide - often contrary to what they claim to provide.
Difficulty of the course: The course is technically simple, but conceptually challenging.