Modeling in A Problem- Solving

Framework
KULIAH 6
 Modelers’ Roles in the Problem-
Solving Process
• End user
– Identifies problems, develops model, uses model, and
implements results
– Often the modeler
• Team member
– Communication skills critical
– Whole team must understand model and assumptions
• Independent consultant
– Model is for a client
– Model must be consistent with client’s goals

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Key Terms: “Problem” Versus a “Mess”
• A problem is a well-defined situation that is
capable of resolution.
• A mess is a morass of unsettling symptoms,
causes, data, pressures, shortfalls,
opportunities, etc.
• Identifying a problem in the mess is the first
step in the creative problem solving process.

Chapter 2 Copyright © 2013 John Wiley & Sons, Inc. 3

 Problem Statements
• A statement in the form “In what ways might…?”
– Focuses on defining the problem to be solved
– Example: “In what ways might we increase revenues
to keep pace with costs?”
• Solutions will differ based on the problem
statement, so:
– Pay close attention to the problem definition.
– Take any problem definition as tentative.
– Prepare to alter the definition if evidence suggests a
different statement would be more effective.

Chapter 2 Copyright © 2013 John Wiley & Sons, Inc. 4

 Characteristics of Well-Structured
Problems
• The objectives of the analysis are clear.
• The assumptions that must be made are
obvious.
• All the necessary data are readily available.
• The logical structure behind the analysis is
well understood.
• Example: Algebra problems are typically well-
structured problems.
Chapter 2 Copyright © 2013 John Wiley & Sons, Inc. 5
 Ill-Structured Problems
• Objectives, assumptions, data, and structure of
the problem are all unclear.
• Examples:
– Should the Red Cross institute a policy of paying for
blood donations?
– Should Boeing’s next major commercial airliner be a
small supersonic jet or a slower jumbo jet?
– Should an advertiser spend more money on the
creative aspects of an ad campaign or on the delivery
of the ad?
– How much should a mid-career executive save out of
current income toward retirement?
• Require exploration more than solutions.
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 Exploration
• With an inquiring mind and a spirit of
discovery, exploration involves:
– formulating hypotheses
– making assumptions
– building simple models
– deriving tentative conclusions
• It often reveals aspects of the problem that
are not obvious at first glance.

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Divergent and Convergent Thinking
• Divergent thinking
– Thinking in different directions
– Searching for a variety of answers to questions that
may have many right answers
– Brainstorming
• Convergent thinking
– Directed toward achieving a goal or single solution
– Involves trying to find the one best answer
– Emphasis shifts from idea generation to evaluation
• Decision makers need to be clear as to which they
use at a given time, and balance the two.
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The Six-Stage Problem-Solving Process
1. Exploring the mess
Divergent phase
Search the mess for problems and opportunities.
Convergent phase
Accept a challenge and undertake systematic efforts to respond to it.
2. Searching for information
Divergent phase
Gather data, impressions, feelings, observations; examine the situation from many
different viewpoints.
Convergent phase
Identify the most important information.
3. Identifying a problem
Divergent phase
Generate many different potential problem statements.
Convergent phase
Choose a working problem statement.

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 The Six-Stage Problem-Solving Process (cont’d)

4. Searching for solutions

Divergent phase
Develop many different alternatives and possibilities for solutions.
Convergent phase
Select one or a few ideas that seem most promising.
5. Evaluating solutions
Divergent phase
Formulate criteria for reviewing and evaluating ideas.
Convergent phase
Select the most important criteria; use them to evaluate, strengthen, and refine ideas.
6. Implementing a solution
Divergent phase
Consider possible sources of assistance and resistance to proposed solution. Identify
implementation steps and required resources.
Convergent phase
Prepare the most promising solution for implementation.

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 Example: Invivo Diagnostics
• A $300M pharmaceutical company built on
the strength of a single product that accounts
for over 75% of revenues.
• In 18 months, the patent for this product will
expire.
• The CEO wants to explore ways to plug the
expected $100-$200M revenue gap as
revenues from this product decline.

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 1. Exploring the Mess
• What problems or opportunities do we face?
• Where is there a gap between the current
situation and the desired one?
• What are the stated and unstated goals?
• This stage is complete when we have:
– A description of the situation
– Identified (not gathered) key facts and data

Chapter 2 Copyright © 2013 John Wiley & Sons, Inc. 12

 2. Searching for Information
• What are the symptoms and causes?
• What measures of effectiveness seem
appropriate?
• What actions are available?
• This stage is complete when we have:
– Found and organized relevant data
– Made initial hypotheses about problem causes
and solutions

Chapter 2 Copyright © 2013 John Wiley & Sons, Inc. 13

 3. Identifying a Problem
• Which is the most important problem?
• Is this problem like others we have dealt with?
• What are the consequences of a broad versus
narrow problem statement?
• This stage is complete when we have
produced a working problem statement.

Chapter 2 Copyright © 2013 John Wiley & Sons, Inc. 14

 4. Searching for Solutions
• What decisions are open to us?
• What solutions have been tried in similar
situations?
• How are the various candidate solutions
linked to outcomes of interest?
• This stage is complete when we have
produced a list of potential solutions.
– Perhaps also a list of advantages and
disadvantages

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 5. Evaluating Solutions
• How does this solution impact each of the
criteria?
• What factors within our control could improve
the outcomes?
• What factors outside our control could alter
the outcomes?
• This stage is complete when we have
produced a recommended course of action
along with justification.
Chapter 2 Copyright © 2013 John Wiley & Sons, Inc. 16
 6. Implementing a Solution
• What are the barriers to successful
implementation?
• Where will there be support and motivation,
or resistance and conflict?
• Are the resources available for successful
implementation?
• This stage is complete when we have
produced an implementation plan and begun
execution.
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 REAL WORLD MODEL WORLD

ASSUMPTIONS
PROBLEM FORMULATION and
STATEMENT MODEL
STRUCTURES

ANALYSIS

RESULTS
INTERPRETATION and
SOLUTION
— translation CONCLUSIONS
— communication

The Real World and The Model World

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 Model Formulation
• Decisions
– Possible choices or actions to take
• Outcomes
– Consequences of the decisions
• Structure
– Logic that links elements of the model together
• Data
– Numerical assumptions in model

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 Five Aspects of Modeling Activity
• Problem context
– Situation from which modeler’s problem arises
• Model structure
– Building the model
• Model realization
– Fitting model to available data and calculating results
• Model assessment
– Evaluating model’s correctness, feasibility, and acceptability
• Model implementation
– Working with client to derive value from the model

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 Mental Models (Informal Modeling)
• Help us to relate cause and effect
– But often in a simplified, incomplete way
• Help us determine what is feasible
– But may be limited by personal experiences
• Are influenced by our preferences for certain
outcomes
• Are useful but can be limiting
• Problem solvers construct quick, informal
mental models at many different points in the
process.
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 Formal Models
• Provide the same kind of information as
mental models
– Link causes to effects, aid in evaluating solutions
• Require a set of potential solutions and
criteria to compare solutions to be identified
• More costly and time consuming to build than
mental models
• Make assumptions, logic, and preferences
explicit and open to debate
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 Influence Charts
• A simple diagram to show outputs and how they
are calculated from inputs
• Tool of choice for complex, unstructured
problems
• Identifies main elements of a model
• Delineates the boundaries of a model
• Recommended for early stages of any problem
formulation task
• Flexible, support frequent revision

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 Building an Influence Chart
• Built from right to left
• Conventions on types of variables
– Outputs – hexagons
– Decisions – boxes
– Inputs – triangles
– Other variables – circles
– Random variables – double circles
– See Figure 2.3 Figure 2.3

Chapter 2 Copyright © 2013 John Wiley & Sons, Inc. 24

 Influence Chart Principles
• Start with outcome measure
• Decompose outcome measure into
independent variables that directly determine
it
• Repeat decomposition for each variable in
turn
• Identify input data and decisions as they arise
• Ensure each variable appears only once
• Highlight special types of elements with
consistent symbols
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 Example 1: A Pricing Decision
• “Determine the price we should set for our
product so as to generate the highest possible
profit this coming year.”

• See Figures 2.2a – 2.2f

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Example 1: A Pricing Decision

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Example 1: A Pricing Decision

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Example 1: A Pricing Decision

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 Example 2: The SS Kuniang 1

• In the early 1980s, New England Electric

System (NEES) was deciding how much to bid
for the salvage rights to a grounded ship, the
SS Kuniang. If the bid were successful, the ship
could be repaired and outfitted to haul coal
for the company’s power-generation stations.
But the value of doing so depended on the
outcome of a U.S. Coast Guard judgment
about the salvage value of the ship.
• See Figure 2.6
1D. E. Bell, “Bidding for the S.S. Kuniang,” Interfaces 14 (1984): 17–23.

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 Example 3: Automobile Leasing
• The primary challenge for companies offering
a closed-end lease is to select the residual
value of the vehicle.
• See Figure 2.7

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 Influence Charts Wrap-up
• The goal is to develop a problem structure—
not to solve the problem.
• There is no one correct chart.
• Charts ignore all available numerical data.
• Charts rely on modeling assumptions that
should be recorded as made.

Chapter 2 Copyright © 2013 John Wiley & Sons, Inc. 32

 Craft Skills for Modeling
• Successful modelers draw on both technical
and craft skills
• Technical skills
– Lead to a single correct answer
– Require no creativity, learned quickly
– Example: Calculating present values
• Craft skills
– Do not lead to a single answer
– Example: Designing a prototype

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 Characteristics of Craft Skills
• Do not lead to a single answer
• Require creativity
• Harder to define and teach
• Develop slowly over time
• Involve modeling heuristics

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 Modeling Heuristics
• Simplify the problem
• Break the problem into modules
• Build a prototype and refine it
• Sketch graphs of key relationships
• Identify parameters and perform sensitivity
analysis
• Separate the creation of ideas from their
evaluation
• Work backward from the desired answer
• Focus on model structure, not data collection
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 Simplify the Problem
• “Model simple, think complicated”
• Simplification
– The essence of modeling
– Increases transparency - aids with buy-in
– Requires a focus on key connections and central
trade-offs
– Involves making assumptions

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 Break the Problem Into Modules
• Keep components as independent as possible.
• Each component is simpler to deal with than
the whole.
• Development of components provides
structure to the modeling process.

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 Decisions

Outcomes
MODEL

Visualization of the Modeling Process

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 Summary
• Effective modeling takes place within a larger
problem solving process.
• Problem-solving process:
– Exploring the mess
– Searching for information
– Defining the problem
– Searching for solutions
– Evaluating solutions
– Implementing the solution

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 Summary (cont’d)
• Mental modeling is an essential tool in
problem solving.
• Formal models provide the same kind of
benefits as mental models.
• Influence charts offer the modeler a bridge
between an ill-structured problem and a
formal model.

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 Summary (cont’d)
• Modeling heuristics are rules of thumb that
help in the design and use of models.
– Simplify the problem.
– Break the problem into modules.
– Build a prototype and refine it.
– Sketch graphs of key relationships.
– Identify parameters and perform sensitivity analysis.
– Separate the creation of ideas from their evaluation.
– Work backward from the desired answer.
– Focus on model structure, not on data collection.

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