Based on the influence chart below, what is the outcome measure for this model?

What is Influence Diagram?

Influence Diagram is a straightforward diagram to show outputs and also exactly how they are calculated from inputs, it is a advantageous tool for facility, unstructured difficulties.

You watching: Based on the influence chart below, what is the outcome measure for this model?

Influence Chart Principles

Built from output to inputIdentify input data and decisions as they ariseA variable should show up only onceDecompose outcome measure right into independent variables that directly identify itRepeat decomposition for each variable, consequently, until no variable left

Conventions on forms of variables

Objectives — hexagonVariables — circleFixed parameters — triangleRandom parameters — double circle (I am not familiar via this one yet, if someone deserve to describe to me, please comment listed below thanks!)Decisions — box

Hand-on practice

This is a instance from my first assignment of Decision Modeling course, I will certainly present you exactly how to make an influence diagram step by step

Case:The Great Threads Company type of sells hand-knit sweaters. Great Threads is planning to print a brochure of its assets and undertake a straight mail campaign. The expense of printing the magazine is $20,000 plus $0.10 a directory. The cost of mailing each magazine is $0.15. In enhancement, the agency will include direct reply envelopes in its mailings. If a customer locations an order upon receiving the directory, he/she will use the straight reply envelope to mail it ago, and also it costs the company extra $0.20 in postage for each direct mail envelope supplied by a respondent. If a customer does not location an order, the direct reply envelope will not be offered, and also no additional expense is incurred for the firm.

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The average worth of a customer order is $40, and also the company’s variable price per order avereras approximately 80% of the order’s value. The firm plans to mail 100,000 catalogs, and also it expects the response rate (portion of customers that mails earlier an order) to be at 5%. It desires to develop a spreadsheet model to analyze its profit.

Step1: Identify the outcome, the point we want to recognize, and also decompose right into independent variables that directly identify it.

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Profit = Revenue - Cost



Step2: Repeat decomplace for each variable, subsequently, till no variable left

I began from the side of Revenue.

Revenue = Order Value($40) * Number of response(Variable)Number of response = Response Rate(5%) * Number of catalogs(plans to mail 100,000 catalogs) (Stop here! No even more variable left)


Then, decomposition the side of cost

Cost = Total order cost + Total catalog cost + Fixed cost($20,000)

Total order cost = Cost of products +Total envelope costTotal catalog price = * Number of catalogs(plans to mail 100,000 catalogs)
Cost of items = Order value * Number of response(currently dewrite above) * Cost percentage(80% of the order’s value)Total envelope cost = Number of response(already decreate above) * Envelope cost($0.20 in postage)

Tbelow is no any kind of variable left! We Just made our first nice and clear Influence Diagram!