Application of Trade Space Exploration and Sequential Decision-Making to Portfolio Management to Inform Army Equipping and Modernization Strategies

Open Access
Author:
Hanson, Thor Kristofer
Graduate Program:
Industrial Engineering
Degree:
Master of Science
Document Type:
Master Thesis
Date of Defense:
November 01, 2016
Committee Members:
  • Timothy William Simpson, Thesis Advisor
Keywords:
  • Trade Space Exploration
  • Portfolio Management
  • Decision Making
  • Portfolio Decision Making
Abstract:
The basic element of portfolio decision-making is choosing which candidates are to be included or excluded from a final portfolio. This choice can be addressed as a series of individual decisions, one for each candidate. Alternatively, the decision-maker can view the portfolio as a whole and make a decision on the inclusion or exclusion of all candidates simultaneously. This work proposes an interactive decision-making process for portfolio management problems where the decision-maker views the portfolio as a whole, simultaneously making the decision on the inclusion or exclusion of all candidates. The proposed portfolio decision-making process follows a sequential decision-making method, utilizing a trade space exploration approach. The Pennsylvania State University’s Applied Research Laboratory Trade Space Visualizer, a multidimensional data visualization tool, is employed to conduct trade space exploration and keep the “human-in-the-loop” during the portfolio optimization process. The proposed decisionmaking process is demonstrated through application to an army equipping and modernization strategies portfolio problem. The application of the proposed portfolio management decisionmaking process on the army equipping and modernization strategies portfolio problem demonstrates the feasibility and usefulness of the proposed decision-making process. Additionally, this demonstration verifies the feasibility of applying the trade space exploration methodology to portfolio decision-making problems.