Decisions, decisions...

Professor Stein W. Wallace1, Management Science 10.40 am Why is it difficult to make decisions? Why do we need large planning departments in major companies? And why do we have to spend so much time recovering when things do not go as planned? From my perspective, there are two major reasons, complexity and uncertainty. Try to set up us schedules for !ondon. All integral parts may e availa le to you, travel needs, resources availa le to you, travel times at different hours of the day, costs... "till, you will not e a le to set it up y hand # it is simply too complex. $omplexity is rather simple to comprehend, though may e not to handle. %ncertainty is a much more su tle phenomenon. %ncertainty is a out lack of information& information which is relevant to your pro lem. What will e the demand for our product, what can we sell it for? What will the weather e like during our out#door concert? Will the government change the 'AT or the interest rate? (idden in all these )uestions is a *When will we know?* $an we postpone the decisions until we know more +or everything,? -r do we have to decide now not fully knowing what will happen? %ncertainty relates to information and its arrival over time. Without uncertainty strategic decisionmaking would not exist. %ncertainty and complexity often hit us in the face simultaneously, and handling them together ecomes an overwhelming task in most cases. What can we do? .n management science and related )uantitatively oriented fields it is very common to drop the uncertainty and use expected/average demand, price or weather. The arguments follow many lines0 *We don1t know anyhow*, *handling the complexity is ad enough*, *we can always check afterwards if our plans are good even if our guesses were a it off*. Are these valid arguments? .s it safe to always give complexity priority over uncertainty? The goal of this talk is to indicate why the answer normally is *no*, and to indicate what we lose when taking this shortcut. Biography "tein W. Wallace is Professor of Operational Research at !ancaster %niversity 2anagement "chool. (e came to !ancaster from The $hinese %niversity of (ong 3ong. (e has also held professorships at 2olde %niversity $ollege, 4orway, and The 4orwegian %niversity of "cience and Technology. (is main interest is decision#making under uncertainty, with a focus on mathematical modelling and industrial applications. (e co#authored the world1s first text# ook on stochastic programming in 5667 and chaired the international organi8ation for stochastic programming +$-"9, 566:#6;. (e came to !ancaster under the !A4$" initiative, an <9"=$ funded major investment to strengthen operational research in the %3. http0//www.lancs.ac.uk/ideasfestival/wallace.htm