Decision making process via binary decision diagram

Abstract

Firms require to optimize any decisions taken for increasing their competitiveness. Each decision will depend of a large number of causes. The relations between the causes and the decisions are effected by the decision making process. An approach to finding the best solution to each logistical or organizational problem is to identify the main causes which are involved for the best decision. A qualitative and a quantitative analysis to facilitate the decision making process is carried out in this paper employing logical decision trees together with binary decision diagrams. This paper presents a novel comparison between different ranking methods applied to several case studies of logical decision trees. The ranking methods considered in this paper are ‘Level’, ‘AND’ and the topological heuristic methods Top-Down-Left-Right, Depth-First-Search and Breath-First-Search. Importance measures have been used for ranking the basic events of the logical decision trees according to their contribution to the top event in order to establish the main causes and, therefore, to determine the critical causes. The importance measures methods employed in this paper are: Fussell–Vesely, Birnbaum and criticality. Finally, an analysis of these importance measures is performed that is based on a comparative study of the different methods for setting the importance measures in order to determine the differences between them.

Keywords::

• decision making
• binary decision diagrams
• ranking methods
• importance measures

JEL Classification::

• L200

Funding

The work reported herein has been financially supported by the Spanish Ministerio de Economía y Competitividad [research grant DPI2012-31579].