dqr400

PLEASE RESPOND AND ANSWER EACH OF THE FOLLOWING QUESTIONS OR POST STATEMENTS. MUST BE 150 WORDS (PLEASE), WRITE IN 3RD PERSON. MUST BE 150 WORDS. (PLEASE), WRITE IN 1st PERSON.PLEASE MAKE SURE TO USE SCHOLARLY PEER REVIEWED ARTICLES AND PLACE EACH REFERENCE USED UNDER EACH ANSWER.

DQ1

Sensitivity analysis is one of the tools available to decision makers that would help n process. Whilst some situations are simple with few variables, others can be quite complex with multiple variables. Sensitivity analysis allows the decision makers the opportunity to focus on specific variables with all other conditions assumed unchanged. The information garnered from the sensitivity analysis can then be represented in the form of a decision tree. According to Patterson (2009) a decision tree is a graphical representation of all possible course of action and outcomes. An example of a public sector utilizing the sensitivity analysis and decision tree can be seen in the National Housing Trust (NHT) deciding to undertake housing development in inner city communities. Although there are many factors to be considered I will focus on profitability.

This agency was established to assist Jamaican by providing low income, affordable housing. One area of need is inner city communities where the lowest income earners are located. In this example the NHT is examining the possibilities of building 50 houses in three communities across the island; ‘X’ ‘Y’ and ‘Z.’ The cost for constructing similar houses would be different for each community. Therefore, for this presentation, construction cost was determined as $1,000, $1200 and $1250 respectively. The condition being examined using sensitivity analysis is the probability of residents leaving their “squatter homes” and taking advantage of the new development. The probability was determined to be 0.7 accept and 0.3 reject. In applying the sensitivity analysis, the above information would be used to calculate expected payoff and these values would be used to develop a decision tree.

References

Patterson, M. (2009) An introduction to decision theory. Retrieved from http://highered.mheducation.com/sites/dl/free/0073401765/663724/Lin01765_ch20_final.pdf

DQ2

Within the public-sector budget and public finance are necessary to make decisions that would impact how public and private sector organizations operate. “Governmental spending indicates the extent of government involvement in society” (Rosenbloom, Kravchuk, & Clerkin, 2009, p. 255). Utilizing sensitivity analysis as a probability statistic to determine outcomes based on specific variables could be beneficial in determining a fiscal year budget for public sector organizations. Typically, there is data history on government entities that analysts can use as an underlying variable to predict a possible outcome if a certain budget amount is set and how the funds can be used towards various departments within a government entity. Being able to identify independent and dependent variables is essential in utilizing statistical analysis. (Stevenson & Ozgor, 2016). Statistical analysis and a decision tree can be used alongside probability statistics to assist in making the most cost-effective decision for an organization. “A decision tree utilizes a diagram to aid in a course of action. It can also be used to show a statistical probability” (Investopedia, 2018, n.p.). Utilizing statistical analysis could also be predictive of the possible situations that could help identify the misuse of funds and hopefully assist decision makers to establish proactive policies to prevent the possible misuse.

References

CBKB. (n.d). Sensitivity analysis. Retrieved September 7, 2016, from

http://web.archive.org/web/20130327075502/http://cbkb.org/toolkit/sensitivity-analysis

Delaney, J., & Seeger, J. (2013). Sensitivity Analysis: Developing a Protocol for Observational Comparative Effectiveness Research. Retrieved March 21, 2018 from

https://www.ncbi.nlm.nih.gov/books/NBK126178/

Investopedia. (2018). Decision Tree. Retrieved March 21, 2018 from

https://www.investopedia.com/terms/d/decision-tree.asp?partner=asksa

Investopedia. (2018) Sensitivity analysis. Retrieved March 21, 2018 from

https://www.investopedia.com/terms/s/sensitivityanalysis.asp

Rosenbloom, D., Kravchuk, R., & Clerkin, R. (2009). Public Administration- Understanding

Management, Politics, and Law in the Public Sector. McGraw-Hill. New York, NY

Stevenson, W. & Ozgor, V. (2016). Introduction to management science with spreadsheets.

Columbus OH: McGraw-Hill.

DQ3

In safety programing initiatives, it is often difficult to predict the outcomes of a program or policy because there is not numerical value or study to compare (CBKD, 2016). In these situations, a sensitivity analysis may be used. For example, you need to plan for residential students on campus during a severe predicted snow storm. In this scenario, you do not have any data from previous storms, only from other campuses because the residence hall is new. There is not a budget for supplies because this was not accounted for. In this case you would want to do a break-even analysis, which is a type of sensitivity analysis. The decision tree below shows that of the two options to handle this situation, the best break even option is Option A.

Option A

Maintain all essential functions on campus, by having essential skeleton staff and their accommodations.

Best Case Scenario the students will be safe, and their needs met.

Worse case Scenario There is not enough resources for the students or this turns into an expensive expenditure.

Break even the cost is the same as a normal day.

Option B

Have a consultant arrange for the necessary services through a third party

Best case Scenario everything is taken care of

Worst case scenario this is well out of the budget for the fiscal year.

Break even There is not one.

Stevenson, W., & Ozgur, V. (2016). Introduction to management science with spreadsheets. Columbus, OH: McGraw-Hill.

Peterson, M. (2009). An introduction to decision theory. Retrieved from http://highered.mheducation.com/sites/dl/free/0073401765/663724/Lin01765_ch20_final.pdf

CBKB. (n.d.). Sensitivity analysis. Retrieved September 7, 2016, from http://web.archive.org/web/20130327075502/http://cbkb.org/toolkit/sensitivity-analysis