Kleinmuntz, Don N. (Strata Decision Technology)

Topics:

Balancing Judgment and Analysis in Business Planning and Forecasting
Advances in analytical tools and techniques have long promised to support huge advances in the quality of business plans and the accuracy of financial forecasts intended to support those plans. However, the application of these tools lags far behind these advances. There are many reasons why these tools do not get used as often or as effectively as they might. This talk will focus on two specific challenges: First, that our models, programs, and techniques are often critically dependent on the quality of judgments provided by human experts. Second, that even when analytical models have been proven far superior to unaided human judgment, business people and other professionals often prefer less accurate - but less analytical - approaches. We will propose some reasons why this occurs and discuss the implications for managing the process of developing business plans and forecasts. (Elementary)

Risk-based Resource Allocation for Counterterrorism
A comprehensive decision analysis approach for optimal resource allocation to counterterrorism measures is described. This work builds on efforts to develop threat assessments for such areas as attacks on critical infrastructure by using those threat assessments as inputs to models designed to help homeland security officials or other agencies optimally allocate investments intended to counter those threats or mitigate damage from those threats. The purpose of this work is to improve methods for risk-based allocation of resources to counterterrorism measures and to provide sound analytical guidance to decision makers regarding the most effective way to obtain maximum impact from a given funding level. This work builds on previous research on decision analysis methods combined with mathematical programming for optimal resource allocation. Consequence assessment models and risk reduction assessments are based on a mix of methodologies including probabilistic risk analysis, economic analysis, and qualitative assessments by experts, as appropriate. Methods for combining these assessments are grounded in the theory and methods of decision analysis. The overall resource allocation framework uses mathematical programming including linear, nonlinear, and integer programming. This talk will emphasize implementation issues and challenges in putting these models to use in the real world. (Elementary or Intermediate)

Improving Enterprise-Wide Capital Budgeting in Hospitals and Healthcare Enterprises
Decision analysis models can be used to improve capital budgeting in business settings where requests for capital far exceed available capital, and where proposed expenditures are difficult to evaluate using traditional financial criteria. This process, which we have implemented in more than 400 hospitals and multi-hospital healthcare systems, uses multiattribute value models to evaluate project benefits, and integer programming to construct optimal project portfolios subject to budget and other constraints. Critical issues include the appropriate deployment of an enterprise-wide software platform to support the information management and data collection requirements of the decision models, staying focused on using the system to help management achieve their strategic and financial objectives. (Elementary)

Overview of Recent Advances in Decision Analysis Approaches for Resource Allocation
Traditional capital budgeting tends to focus on projected cash flows from projects and investments. This typically ignores two considerations: (1) the highly uncertain nature of cash flows, and (2) difficulties assessing the strategic benefits when using financial measures alone. This talk will give an overview of decision analysis methods that address these issues. Topics covered can be tailored to audience interests but include: Using influence diagrams, decision trees, and Monte Carlo simulation to model uncertain cash flows, probability assessment issues and pitfalls, practical methods for incorporating risk tolerances, real options methods for evaluating financial risk, multiobjective value models for integrating financial and strategic considerations, and use of optimization techniques to select capital project portfolios. (Intermediate)

Background:

• B.A. Statistics University of Chicago
• M.B.A. Statistics University of Chicago
• Ph.D. Business Administration University of Chicago

Don N. Kleinmuntz, Ph.D., is cofounder, Executive Vice President and Chief Financial Officer at Strata Decision Technology LLC. Established in 1996, the company develops software for budgeting, planning, and reporting with a particular focus on U.S. hospitals and healthcare organizations. The company has approximately 70 employees working from offices in Champaign and Chicago, Illinois, with systems in use at over 1,500 healthcare related businesses, leading medical centers, and multi-hospital health systems, including more than 20% of U.S. hospitals.

Previously, he held faculty positions at the University of Southern California, University of Illinois at Urbana-Champaign, Massachusetts Institute of Technology, and the University of Texas at Austin. He holds a BA in statistics, MBA, and Ph.D. with specialization in decision theory and statistics, all from the University of Chicago. Dr. Kleinmuntz has consulted on decision processes and decision analysis applications with a wide variety of corporations, professional service firms, hospitals, healthcare systems, as well as government agencies at both the state and federal level.

Dr. Kleinmuntz's professional interests focus on using quantitative analysis to improve financial and business decisions. This includes work on mathematical and computational models of decision processes, resource allocation models, and decision analysis applications to healthcare management and homeland security. In 1997, he was named a Fellow of the Association for Psychological Science, and in 2007, he was named a Fellow of the Institute for Operations Research and Management Sciences (INFORMS).

Dr. Kleinmuntz is an active member of INFORMS, and served as the organization's President in 2009. He has also served as Treasurer (2003-2006), a founding Editor-in-Chief of the journal Decision Analysis (2001-2006) and as an Associate Editor of Management Science (1995-2001).