For each path, we form a linear program to forecast the production costs. The probabilistic production costs can be computed by calculating expected production cost using the decision tree. Only units available can participate in meeting the spinning or load requirements. Only those units which are participating in meeting the load requirement at any give time can be used to meet the total spinning requirements. The first step of decision analysis is to construct an influence diagram to represent the contract selection problem.
Influence diagrams are a means of representing the same decision problem much more compactly.
For each chance and decision variables in the decision tree, there is a single object in the graph. Arrows connecting these objects represent probabilistic and informational relationships. An influence diagram is a theoretical construct and an evaluation device with all the power of a decision tree. We present the influence diagram of contract selection problem and the corresponding decision tree in Figure 4 and 5 respectively. Decision nodes are represented by squares.