The DecisionTools Suite is used at hundreds of academic institutions around the world, by more than 40,000 MBA students.

New Edition of Book “Risk and Decision Analysis in Projects”

riskanddecisionanalysisinproject3edcoverJohn R. Schuyler delivers a wholly rewritten and expanded successor to the best-selling prior editions of his book.

Decision analysis provides assistance in making logical, consistent decisions under uncertainty. This book instructs readers in applying decision analysis to a wide range of project decisions. An essential concepts and how-to guide intended for serious Project Management students and practitioners, the scope of the book is quantitative analysis, from project inception to post-project review. The entire asset life cycle is covered, from an initial feasibility analysis, to the project plan, to the post-project review, and on to a look-back analysis of the capital investment decision.

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» Download @RISK – try it for yourself!

@RISK Models Cancer Risks of Carcinogen Intake from Food and Beverages for Canadians

universityofvictoriaWhile news headlines regularly report on acute health issues relating to food and beverages, such as E. coli outbreaks and salmonella poisoning, very little is known about the adverse health issues caused by the longer-term intake of contaminants in those foods and beverages – including carcinogens. The University of Victoria (UVic), a national and international leader in many areas of critical research, participated in the CAREX Canada Project, funded by the Canadian Partnership Against Cancer, to better understand the environmental and occupational exposures to substances associated with cancer, and subsequently provide support for exposure reduction strategies and cancer prevention programs.

The UVic team used @RISK, Palisade’s risk analysis software, to model differences in Lifetime Excess Cancer Risk for Canadians based on contaminants found in food and beverages. The results revealed notable differences in cancer risks for several different demographics, and are detailed in the thesis, Geographic Exposure and Risk Assessment for Food Contaminants in Canada, by Roslyn Cheasley, a Master’s student with the Department of Geography at UVic.

Palisade’s @RISK enabled the team to easily and effectively determine the concentration of carcinogenic elements in the identified food and beverage products, as well as learn if certain demographics were more at risk from dietary patterns than others.

“We decided to take things up a notch when we updated the data, and upgrade to a probabilistic analysis model based on Monte Carlo simulation,” said Cheasley. “We wanted to estimate the range and frequency of possible daily contaminant intakes for Canadians, as well as associate these intake levels with lifetime excess cancer risk. This is where @RISK came into the equation.”

» Read the complete case study here
» Learn more about @RISK
» University of Victoria (UVic)

@RISK Manages Operational Risks in the Green Supply Chain

graphicerauniversityAs the public becomes more aware of environmental issues and global warming, consumers are asking more questions about the products they purchase. This has resulted in a growing number of companies considering the move to green supply chain management (GSCM) and integrating environmental thinking into their supply chain management.

“Many companies are concerned that changing their established processes and implementing a green supply chain could result in lower quality products, delayed shipments, or even a loss of business,” explained Dr. Sachin K. Mangla of the Indian Institute of Technology Roorkee and Graphic Era University – Dehradun.

“Going green” can be a complex transition from an operational perspective, and not all companies are convinced that improved environmental performance will lead to financial gains. As green supply chain (GSC) considerations typically introduce different operational activities and processes to the supply chain, they also create new uncertainties and risks which can have a significant impact on a manufacturing-based business.

Dr. Sachin K. Mangla with Graphic Era University-Dehradun used Palisade risk analysis software @RISK to identify and evaluate the operational risks of implementing a GSC for a well-established plastic manufacturing company in India. The results generated a wide variety of possible risk scenarios, as well as associated probabilities. “@RISK enabled us to not only predict the type of risks that could happen, but also anticipate what risks were most likely to happen,” said Mangla. “This enabled us to create a model that provides companies with visibility into the potential ecological-economic gains of a green supply chain, as well as recommendations to best manage the operational risks.”

» Read the complete case study here
» Learn more about @RISK
» Graphic Era University – Dehradun

University of Pretoria Creates an @RISK Model for Stopping the Spread of Avian Flu

UniversityofPretoriaThe avian influenza virus – or avian flu – is a fast-spreading infection that affects poultry and potentially people worldwide. While the risk to humans is not completely understood, stopping human exposure to the virus is critical. According to Dr. Folorunso Oludayo Fasina, a senior lecturer at the University of Pretoria’s Department of Production Animal Studies, it is important to understand “how the virus gets into the food system, how it spreads and how it can be managed. To do this, we need risk assessment and exposure assessment, as well as a response model. Once we have this information, we can implement measures to stop the risks.”

Dr. Fasina and his colleagues created a model for foodborne contamination that was specific to Africa, where the virus has already infected 12 countries. The team studied both biological and cultural aspects, including food processing, trade, and cooking-related practices, and collected data from more than 375 Egyptian and Nigerian sites including homes, local producers, live bird markets, village and commercial abattoirs and veterinary agencies. As a first step, the team used Palisade’s TopRank tool, part of the DecisionTools Suite, to analyze the sensitivity of each of the identified contributors to the overall risk. This helped the team understand which of the contributors were the most important.

Next, the team moved to @RISK to help predict the different ways the virus could be spread. Using Monte Carlo simulation, @RISK can quantify the probabilities of different outcomes – or infection rates – occurring, as well as determine the optimal preventive measures to mitigate the risk of animal-to-person infection.

The results revealed numerous opportunities for the avian influenza virus to be spread, and found that the estimated risk for humans was higher than previously reported. Says Dr. Fasina, “@RISK is a valuable tool to investigate these problems and do risk predictions either prospectively or retrospectively. Utilizing the outputs from models like this can help health policy planners and public health officials to take anticipatory measures to prevent future disasters associated with infectious diseases like the avian flu.”

» Read more about the study here

Mining Students at U of Witwatersrand Get Practical Financial Analysis Experience with @RISK

WitwatersrandThe University of Witwatersrand in South Africa is offering its mining engineering students some valuable practical guidance and financial analysis experience, to equip them with proficiencies and knowledge that will be required in their professional lives.

Using Palisade’s risk analysis tool @RISK, the school is giving students training in and knowledge of Monte Carlo Simulation. Professor RCA Minnitt from the University explains why this is so imperative: “It’s very important to give students a real-world feel of how mining operations are managed financially – before they head out into the professional world. An understanding of Monte Carlo simulation is absolutely essential. Without this discipline’s knowledge and use, robust and credible financial analysis is not possible. @RISK is an essential tool for both our undergraduate and post graduate programmes.”

The University feels @RISK is well suited for Monte Carlo Simulation in academia, and values its ability as a modeling training tool, which gives the students a head start in their professional careers.

For more information please view the full case study here.

Is it Best to Hedge Your Lettuce? @RISK and StatTools Help Answer the Question

Agriculture is traditionally one of the highest risk economic activities. In California, many produce farm operations use a rule-of-thumb to manage their seasonal finances–often aiming to contract 80% of their crop in advance to buyers at set prices, and leaving the remaining 20% to be sold at spot prices in the open market. The rationale for this is based on an assumption that costs, and a reasonable margin, can be covered with 80% of production hedged by forward contracts. The hope is the remaining 20% of production will attract high prices in favorable spot markets, leading to substantial profits on sales. Of course, spot prices might not be favorable, in which case any losses could be absorbed by the forward sales.

Steven Slezak, a Lecturer in the Agribusiness Department at Cal Poly, San Luis Obispo, and Dr. Jay Noel, the Agribusiness Department Chair, used @RISK to conduct a case study on an iceberg lettuce producer that uses the rule-of-thumb approach to manage production and financial risks. “We wanted to know if the 80% hedge actually covers costs over the long-term and if there are really profits in the spot market sales. We wanted to know if the return on the speculation was worth the risk. We found the answer is ‘No’.”

Slezak and his colleagues created an @RISK revenue distribution model with inputs such as past revenue, harvest costs, and crop yields. They used StatTools to create the distribution parameters. Next, @RISK was used to simulate combinations of all costs and revenue inputs using different hedge ratios between 100% hedging and zero hedging. By comparing the results of these simulation in terms of their effect on margins, it was possible to determine the effectiveness of the 80% hedging rule of thumb and the value added by holding back 20% of production for spot market sales.

“While growers have to give up some of the upside, it turns out the downside is much larger, and there is much more of a chance they’ll be able to stay in business,” says Slezak. In other words, the cost-benefit analysis does not support the use of the 80% hedged rule-of-thumb. It’s not a bad rule, but it’s not an optimal hedge ratio.

Slezak is a long-time user of @RISK, and has relied on the software to perform economic and financial analysis on a wide range of problems in industries as diverse as agribusiness, energy, investment management, banking, interest rate forecasting, education, and in health care.

Read the complete case study here.

@RISK Helps Keep Pupfish from the Brink of Extinction

@RISK Helps Keep Pupfish from the Brink of ExtinctionThe Devils Hole pupfish (Cyprinodon diabolis) is one of the world’s most endangered animals. There is only one wild population living in a single aquifer-fed thermal pool in Nye County, Nevada, and has been perched on the brink of extinction at 35–68 fish in 2013. A major strategy for conserving the pupfish has been to create additional captive populations, but scientists needed to know how to best extract wild pupfish for breeding purposes without unduly accelerating the extinction risk for the population in Devil’s Hole. Dr. Steven Beissinger, Professor of Conservation Biology at the University of California, Berkeley, constructed a population variability analysis (PVA) using @RISK to better inform this dilemma.

Dr. Beissinger first created models for extinction risk in the wild for the pupfish, which showed that most simulated populations of the pupfish became extinct within 50 years. Median and mean time to extinction were 26 and 27 years, and 17 and 22 years, respectively. Next, to evaluate the effects of different strategies for removing individuals to initiate a captive breeding program on the wild population, Dr. Beissinger modeled the effects of removing different numbers of individuals (0–14) at the start of each simulated year.

Dr. Beissinger then wanted to answer the question of which life-stage should pupfish be harvested. The model showed that removing pupfish eggs had the least effect on the wild population. Indeed, Dr. Beissinger calculated that removing 25 eggs for captive breeding is equivalent to removing a single adult in terms of its influence on population dynamics.

This modeling work has helped to inform decisions made by the U.S. Fish and Wildlife Service to conserve the Devil’s Hole pupfish, which has now begun to remove pupfish eggs from Devil’s Hole to start a captive population in its state-of-the-art breeding facility. “The modeling helped everyone to see what some of the trade-offs would be and made the various outcomes more explicit,” says Dr. Beissinger.

Dr. Beissinger uses @RISK for both research and teaching, and finds it to be a valuable tool: “@RISK makes Monte Carlo processes easy for professionals and students to understand,” he says. “The nice thing about it, from my perspective, is that it functions within Excel, which makes visualizing the information a lot easier and more intuitive for people. It makes what would otherwise be a lot of tedious steps a lot easier to do.”

Read the complete case study.


How Safe is That Shrimp? @RISK Tackles Health Hazards After Deepwater Horizon Spill

Southeast Louisiana is home to a large population of Vietnamese Americans who rely heavily on the shrimp caught in the Gulf for their livelihood and as a food source. When the Deepwater How Safe is That Shrimp? @RISK Weighs Health Risks of Seafood after Deepwater Horizon SpillHorizon oil spill happened in in April 2010, Vietnamese shrimpers were particularly concerned. While the U.S. Food and Drug Administration (FDA) conducted risk assessments on seafood contaminant levels and health risks, the Vietnamese community worried that the risk assessment conducted by the FDA did not accurately take into account their much higher levels of shrimp consumption and lower-than-national-average body weight. They were also concerned that the FDA did not source specimens from the key areas where they commonly fished for shrimp.

At the request of a prominent Vietnamese community organization, Dr. Jeffrey Wickliffe, Associate Professor of Global Environmental Health Sciences at the Tulane University School of Public Health and Tropical Medicine, conducted a targeted health risk analysis on the Vietnamese shrimping community and their potential for heightened risk from the Deepwater Horizon spill. He and his colleagues collected key data, including concentrations of PAHs in shrimp; daily shrimp intake rates of surveyed Vietnamese community members; assumed durations of exposure that people had to PAHs; individual’s self-reported body weights; and averaging times (the time used to average out the dose of PAHs).  Using @RISK, the model for these inputs was simulated 10,000 times, and a sensitivity analysis was conducted to determine the most influential parameters. The analysis revealed that the concentration of chemicals and the daily shrimp intake rate were the most influential in determining risk levels, however, “The study showed that the shrimp were really low in PAHs overall,” says Dr. Wickliffe. “In fact, the testing did not actually detect any of the known carcinogens.”

Nonetheless, to be extremely conservative in their analysis, Dr. Wickliffe and his team modeled health risks using even more cautious assumptions about the presence and carcinogenicity of the PAHs. It was only under the very most conservative approach that excessive health risks (> 1 in 10,000 at the 99th percentile) were seen, and even then, they appeared only in the extreme upper tail of the modeled risk distribution. While these results are reassuring in terms of the overall health risk posed to the Vietnamese American shrimping community, Wickliffe’s team cautions that this approach is not currently tenable for policy-based chemical risk assessment because of the dearth of knowledge regarding the toxicology of these modeled compounds.

Dr. Wickliffe uses @RISK in all the courses he teaches. “Probabilistic analysis is where the regulatory agencies are going with risk assessments,” says Dr. Wickliffe. “So for students who are getting a degree in public health and environmental health sciences, this is the kind of training they need—they need to know how to conduct this kind of risk assessment.”

Read the full case study here.

Learn more about @RISK.


@RISK Crucial in Live Donor Kidney Transplant Study

@RISK Crucial in Live Donor Kidney Transplant StudyA new study out of the University of Texas Southwestern Medical Center reveals important new information for those donating, and receiving, kidneys.

Living donor kidney transplantation is the preferred treatment for advanced renal failure. Roughly 20-25% of living donors can have asymmetry between their kidneys’ size and efficiency in filtration abilities. With a 10% or greater size difference between the two kidneys, doctors typically perform an additional test to measure the function of each kidney as a guide to select which kidney to transplant (they use the smaller, less efficient kidney for transplantation). Most transplant centers arbitrarily consider size and functional asymmetry of less than 10% as clinically insignificant, and asymmetry of more than 20% as a cut-off for transplantation, the concern being that the smaller kidney may not be healthy enough to be desirable for donation.

Dr. Bekir Tanriover, Assistant Professor of Internal Medicine at University of Texas Southwestern Medical Center, wanted to examine kidney transplant asymmetry more closely. “When you have more than a 10% difference in kidney size, how does this asymmetry translate into how well the kidney functions once it is transplanted in the recipient? How much kidney asymmetry is actually acceptable?”

To tackle these questions, Tanriover and his colleagues conducted a retrospective study of 100 kidney donors who had asymmetric kidneys, gathering three measurements from each patient: the kidney size (volume), filtration efficiency, and biopsy scores, and plugged them into @RISK.

The model showed a clear correlation between donor kidney size and recipient outcomes. In fact, the model showed that kidney size was the only variable that truly mattered when it came to the three measurements, negating the need for any more invasive testing on the donor kidneys.

Dr. Tanriover also conducted a sensitivity analysis in @RISK to determine if it is safe to transplant a kidney that has extreme functional asymmetry, or if the patient should wait for a kidney from a deceased donor. “The risk of receiving a preemptive living renal transplant with any extreme [functional difference], as long as adequate donor kidney volume is transplanted, outweighs the benefit of waiting for a deceased donor renal transplant with higher function,” Tanriover writes in the study, which appears in an upcoming issue of Transplantation. “The reason for this is that the preemptive kidney transplantation offers lower mortality and allograft failure risk as compared with patients who received a transplant while on dialysis.”

Read the full case study here.

Professor Hooked on @RISK Brings its Benefits to Cal State Monterey Bay

Dr. Sumadhur Shakya, Assistant Professor of Operations Management & Agribusiness at California State University, Monterey Bay (CSUMB), has used @RISK in his own academic research and as a teaching tool in his classes, Operations Management and Supply Chain Management. Indeed, thanks to his championing of the software, 360 students at CSUMB will use @RISK, annually, either in Dr. Shakya’s classes, or in other business courses such as Commodity Trading.

Dr. Shakya says he ‘got hooked’ on Palisade’s software when he was in his Master’s program at North Dakota State University, and later in his Ph.D. at the Upper Great Plains Transportation Institute. He used it to apply  a ‘real option model’ for the valuation of random genetic traits, such as drought tolerance, in crop plants to determine their viability at various stages of development. @RISK was useful in accounting for the assorted uncertainties involved in these kinds of prospects, such as the size of the capital investment to develop the traits, rate of adoption post commercialization stage, and expected return to farmers/users in case drought occurs. Through using @RISK’s simulation models, Dr. Shakya’s research concluded that, after a few years of what looked like an out-of-money (financial losses) option, the traits ultimately became profitable after passing the third stage of development, and later during commercialization. “Had it not been for this model I developed via @RISK, most people would not have invested in the development of trait because in the first and second stage of commercialization, the option looked like it was a loss,” says Dr. Shakya.

Now, as a faculty member at CSUMB, Dr. Shakya has advocated for and introduced @RISK to his and other classes, so that students can learn the benefits of quantitative risk analysis in business and operations management. With support of CSUMB, he is in the process of helping to develop a bachelor’s program in AgBusiness  that will focus on supply chain management, perishable and non-perishable agricultural commodities, precision agriculture, alternative Ag technology (like vertical farming, genomics, water management etc.) and sustainability, while covering subjects like viticulture and Ag tourism to meet the needs of the Salinas Valley and beyond. It will complement the programs at UC Davis and Cal Poly, San Luis Obispo. This new program will have a rigorous training in using @RISK to evaluate and model uncertainties in crop rotation plans, inventory management, and the dynamics within the perishable commercial agriculture supply chain. “Our plan is to not just @RISK, but also the DecisionTools Suite,” says Dr. Shakya. “Particularly, we would use StatTools.”

If approved, this new Bachelor’s program would be active and running by 2017.

 » Read Dr. Shakya’s paper that got him hooked on @RISK
 » More about the DecisionTools Suite