Engineering students at one of China’s top universities, Shanghai Jiao Tong University, are learning how to deal with risk analyses and decision making with the best tools in the industry: @RISK and the DecisionTools Suite. Professor Li Mian, an authority in system design and optimization, uses the tools not only in his own research, but in the classroom as well.
Professor Li’s Background
Dr. Li is a professor at the University of Michigan – Shanghai Jiao Tong University Joint Institute. His research includes complex engineering system design and optimization, decision-making and optimization theory.
His first contact with the Lumivero (previously Palisade) risk and decision-making analysis software came when he was studying for his Ph.D. at the University of Maryland in 2006. At that time, Dr. Li's Ph.D. program included a Decision-Making course based on the DecisionTools software (including @RISK). The chief application of the software was the evaluation of the risks extant in a system during the system design and analysis process. Li first used the software in tandem with the textbook Making Hard Decisions, an authoritative text in the field of risk analysis and decision-making. The course had a profound impact on Li, who discovered the ease of applying principals and testing with the DecisionTools software.
Li returned to China in 2009 with his Ph.D. and assumed a teaching position at Jiao Tong University in Shanghai. Having used DecisionTools and @RISK as a student, he was well aware of the advantages of these tools in risk analysis decision-making. As a result, he decided to offer a graduate level course at Jiao Tong University using the same teaching materials and @RISK software that he had used when he was a student.
DecisionTools for Research
In the classroom, Dr. Li demonstrates many of the analytical tools in DecisionTools. Apart from applying the software in his lecture, he is still engaged in research as well. For instance, he applies analytical tools such as @RISK, PrecisionTree, TopRank, and StatTools to specific calculations in the system design process, enabling him to analyze his ability to guarantee original design performance while changing different variables. He also uses the tools to perform decision analyses for system users.
Dr. Li Mian
University of Michigan – Shanghai Jiao Tong University Joint Institute
Choosing an Analytical Tool
When deciding whether to use Lumivero risk and decision analysis software such as @RISK as instructional material or as a scientific research tool, Dr. Li and other researchers also looked at other analytical research software on the market, such as Matlab. One of the major problems they ran into with these programs was the time-consuming nature of inputs when many types of randomly distributed input parameters were present. Although Matlab and other similar software also offer some of the risk and decision analysis functionality as Lumivero's software, researchers have to add their own code to access this level of functionality, taking considerable effort and time. In contrast, Lumivero risk and decision analysis software simplifies these functions so that they are easy to use, and allows the creation of comprehensive data models.
Using DecisionTools for Product Pricing and Engineering Design
Dr. Li gives two examples on how the software is used in his teaching and research. The first example involves a study of pricing risk and decision-making when introducing a new product to the market. The price of a new market-entry product will be affected by many factors, such as the costs of raw materials and labor during the production process. While these two factors have a decisive influence on a product's final price, how big is their impact? This was what Li wanted to find out. He and his research team settled on a Monte Carlo simulation, reducing the two factors to uncertain values with random characteristics, where each value was assigned a random variable distribution. The researchers then applied the Monte Carlo method to confirm the relative influence of these two factors on the ultimate product price. The whole approach was simple and intuitive.
The second example involved Li's use of the software in his course work. He applied the software when determining the influences of various factors on tolerances in car engine design. While all engines have design tolerances built-in during the design and manufacturing processes, complex calculations and analysis are needed to determine the degree of impact that each uncertainty has on tolerances throughout the engine design and production process. This kind of application is important to many types of scientific research.
Dr. Li decided to approach the problem with a sensitivity analysis. While running this kind of analysis is very complex in most analytical software – often requiring researchers to perform their own programming – Dr. Li managed to save a lot of time by using the tools from Lumivero. DecisionTools Suite can help researchers perform this research with great ease, and users familiar with the toolkit can complete the procedures with just two or three commands. Because the Suite also incorporates the PrecisionTree, @RISK, and TopRank software, it facilitates researchers' workloads enormously, enabling them to avoid complicated and laborious procedural work.
Short Learning Curve
As far as Dr. Li is concerned, good software should not require users to spend an exorbitant amount of time learning to use it. The Lumivero risk and decision analysis software easily meets this criterion, making it exceptionally easy for users to get up and running quickly. In addition, the fact that it runs in Microsoft Excel makes it even more user-friendly. Continuous upgrades also give Lumivero even more comprehensive and powerful functionality, and allow it to handle an even wider range of random process distributions and data types. As for Dr. Li's use of @RISK in the classroom, experience shows that the use of @RISK, DecisionTools or PrecisionTree in decision-making courses enables students to perform highly flexible case analysis in assigned projects, and carry out decision analysis of any issues that may be encountered in a system. The result is that students are able to grasp a number of related concepts with greater ease, while gaining powerful tools to facilitate solving practical problems. In Dr. Li’s research, @RISK has provided excellent support for the calculations and optimization required in areas like engine design and decision-making support theory, thus saving huge amounts of time and effort.
As Dr. Li noted in his overall assessment of the Lumivero risk and decision analysis software: While past analytical research required extensive manual calculations, the use of @RISK's risk and decision analysis software has eliminated the need for this time-consuming, labor-intensive work. "So simple" and "so easy to use" are common phrases in @RISK user feedback. Says Dr. Li, "You can now complete what originally took you 20 hours to do in as little as a single hour!"
Originally published: Oct. 5, 2022
Updated: June 7, 2024