2.

Multi-Objective Decision Tree

a. Problem Statement: A deadly outbreak of the Swine Flu was reported in SW Asia in June. Our post has the option to vaccinate the entire post in July at a high cost (due to the expedited manufacturing and transportation of the vaccine). The other option is to wait until more information on the outbreak is available and then decide to vaccinate. At the same time, the post would also like to minimize the loss of life due to the flu. b. Parameters (Diagram 1) Cost i. Vaccination Cost (July) - $500,000 ii. Vaccination Cost (August) - $400,000 (if the virus has spread) iii. Vaccination Cost (August) - $300,000 (if virus has not spread) iv. No vaccination Cost - $0 Loss of Life i. After the vaccination has been administered, there is no possibility for additional loss of life ii. After 1 month of flu exposure, the loss of life is expected to be 5% iii. If the flu continues unchecked for a second month, the total loss of life is 20% Virus Parameters i. Virus is either highly contagious or less contagious ii. If highly contagious: 1. 75% chance virus will spread 2. 25% chance virus will not spread iii. If less contagious: 1. 50% chance virus will spread 2. 50% chance virus will not spread iv. With no prior knowledge, it is equally likely to be highly or less contagious v. After the first decision period, we will know if the virus has spread or not. This will give us some insight into whether the virus is highly contagious or less contagious.

Diagram 1. Parameters.

c. Calculations and Policy Options (Diagram 2) Pr(Spread) =Pr(Spread| Highly Contagious)*Pr(Highly Contagious) + Pr(Spread| Less Contagious)*Pr(Less Contagious) =Pr(No Spread| Highly Contagious)*Pr(Highly Contagious) + Pr(No Spread| Less Contagious)*Pr(Less Contagious) 0.625

C1 Probabilities

Pr(No Spread)

0.375

Before the second decision point, the decision maker will know if the virus has spread or not. That information will give insight into whether the virus is highly or less contagious. Those updated probabilities are below. Pr(Highly Contagious| Spread in C1) Pr(Highly Contagious| Bayesian Updates No Spread in C1) Pr(Less Contagious |Spread in C1) Pr(Less Contagious| No Spread in C1) =Pr(Spread| Highly Contagious)*Pr(Highly Contagious)/Pr(Spread) =Pr(No Spread| Highly Contagious)*Pr(Highly Contagious)/Pr(No Spread) =Pr(Spread| Less Contagious)*Pr(Less Contagious)/Pr(Spread) =Pr(No Spread| Less Contagious)*Pr(Less Contagious)/Pr(No Spread) 0.6

1/3

0.4

2/3

Pr(Spread| Spread in Stage C3 1)

=Pr(Spread| Highly Contagious)*Pr(Highly Contagious| Spread in Stage 1) + Pr(Spread| Less 0.65

Contagious)*Pr(Less Contagious| Spread in Stage 1) =Pr(No Spread| Highly Contagious)*Pr(Highly Contagious| Spread in Stage 1) + Pr(No Spread| Less 0.35

Probabilities Pr(No Spread| Spread in Stage 1) Pr(Spread| No C5 Probabilities spread in Stage 1)

Contagious)*Pr(Less Contagious| Spread in Stage 1) =Pr(Spread| Highly Contagious)*Pr(Highly Contagious| No Spread in Stage 1) + Pr(Spread| Less 0.5833

Contagious)*Pr(Less Contagious| No Spread in Stage 1) =Pr(No Spread| Highly Contagious)*Pr(Highly Contagious| No Spread in Stage 1) + Pr(No Spread| Less 0.4167

Pr(No Spread| No spread in Stage 1)

Contagious)*Pr(Less Contagious| No Spread in Stage 1)

Fold Back across C2 through C5 C2: [$400,000, 5] C3: [(0*0.65) + (0*0.35), (20*0.65) + (5*0.35)] = [$0, 15] C4: [$300,000, 0] C5: [(0*0.58333) + (0*0.41667), (5*0.58333) + (0*0.41667)] = [$0, 2.92]

Lives Policy Options Calculation Cost Lost (%) Vaccinate Spread - Vaccinate; No Spread - Vaccinate Spread - Vaccinate; No Spread - No Vaccinate Spread - No Vaccinate; No Spread - Vaccinate Spread - No Vaccinate; No Spread - No Vaccinate 1 * [500000 , 0] Pr(Spread) * C2 + Pr(No Spread) * C4 = $362,500 0.625 * [400000 , 5] + 0.375 * [300000 , 0] Pr(Spread) * C2 + Pr(No Spread) * C5 = $250,000 0.625 * [400000 , 5] + 0.375 * [0 , 2.92] Pr(Spread) * C3 + Pr(No Spread) * C4 = $112,500 0.625 * [0 , 15] + 0.375 * [300000 , 0] Pr(Spread) * C3 + Pr(No Spread) * C5 = $ 0.625 * [0 , 15] + 0.375 * [0 , 2.92] 10.3 9.2 4.2 3.1 $500,000 -

Diagram 2. Probabilities and Policy Options.

d. The Pareto Optimal Frontier

% Lives Lost vs. Cost ($)

12.0
Spread No Vaccinate; No Spread No Vaccinate Spread No Vaccinate; No Spread Vaccinate

Lives Lost (%)

8.0

Spread Vaccinate; No Spread No Vaccinate

4.0
Spread Vaccinate; No Spread Vaccinate

$$100,000 $200,000 $300,000 Cost ($) $400,000

Vaccinate

$500,000

$600,000

The above chart shows all the policy options, their associated costs and risk of loss of life. All of the policy options lie on the Pareto Optimal Frontier; none of them are dominated. This means each of the options could be optimal, depending on which objective is more important (minimizing cost or saving the most lives). It appears that if no vaccine is purchased, the loss of life at the post could be quite devastating at 10.3% (103 people at our 1000 person post). Vaccinating from the beginning is a safe option, with no loss of life. Also, the costs are not too much greater than vaccinating at any point in the future.