In a few weeks, Santa Claus will embark on his annual Christmas eve ritual, delivering presents to the good little boys and girls around the world. In this article, I look at the net energy expenditure and greenhouse gas emissions attributable to this magical tour. Many aspects of Santa’s amazing technology are not publicly available, so it will be necessary to make numerous educated guesses to complete the analysis. I will derive an estimate for the total distance traveled, velocities obtained, work expended to reach the implied kinetic energies and energy losses due to air friction. … [Continue reading...]

## Greenhouse Gas Emissions and Energy Expenditure from Santa’s global tour

## Congratulations to Dr. Max Henrion for Decision Analysis Society’s 2014 Best Practice Award

I want to offer my congratulations to my colleague here at Lumina Decision Systems, our CEO Dr. Max Henrion. The annual INFORMS conference took place this week in San Francisco, where Max gave a presentation on the PLATFORM Oil & Gas Platform Decommissioning Decision Support Tool (see the case study). The Decision Analysis Society and the Society of Decision Professionals awarded him the Decision Analysis Society 2014 Practice Award. Congratulations Max! ---- Here is the award announcement that was sent out: Dear DAS Members - I am posting … [Continue reading...]

## Latin Hypercube vs. Monte Carlo Sampling

In a recent post on Linked In, David Vose argues that the advantages of Latin Hypercube sampling (LHS) over Monte Carlo are so minimal that "LHS does not deserve a place in modern simulation software." [1] He makes some interesting points, yet products like Analytica and Crystal Ball still provide LHS and even offer it as their default method. Why? Are we, the makers of these simulation products naïve? As the lead architect of Analytica for two decades, I've explored this question in detail. I've compared the performance of LHS vs. Monte Carlo on hundreds of real-world models. And I've … [Continue reading...]

## The Value of Knowing What You Don’t Know

Few of us really like uncertainty. It fills us with dread. It frustrates our planning efforts. It makes analyzing its effects complex. After all, where in a spreadsheet do you put uncertain values for revenue or costs? Admittedly, accounting for uncertainty can be difficult, but doing so can add a lot of value to your business decisions. Let me explain… The Problem – “How Do We Communicate the Value?” A colleague recently took on the opportunity to broker the sale of a resort hotel. The hotel was recently refurbished and now operates profitably at an approximate 69% occupancy … [Continue reading...]

## Announcing Analytica 4.5

Lumina Decision Systems has announced the release of Analytica 4.5. One change that is sure to garner lots of attention is the new Analytica Free 101 edition. That's right -- there is now a fully functional edition of Analytica that you can use to build your own models, or to use models built by other people, which costs nothing and never expires! This is especially great for students, who can use it in their courses that use Analytica in the curriculum, and then continue using it after the course ends for other projects. It can even be used in moderate-sized commercial projects. The … [Continue reading...]

## Fast Times to the Core

I remember a time when my driver’s license was just a learner’s permit, tater tots were the best part of lunch, my Great Gatsby book report was due on Friday, and physics was all about stick figures and arrows. If I had to choose just one word to describe these days I would call them frictionless. A single word can never do justice to every aspect of high school life but this one covers a surprisingly broad range: the tires on my VW Bug, the wooden desk seats, my face, and those delicious tots. The nice part about the frictionless era was living in a bubble of impractical hypothetical … [Continue reading...]

## Analytica 4.5 beta available

Update 16 Dec 2013: The beta testing period for Analytica 4.5 is now closed. (Below shows the article as it appeared when posted 2 Aug 2013) The first beta release of Analytica 4.5 and ADE is now available. This kicks off the beta testing cycle for this next release of Analytica and ADE. To see a list of new enhancements, visit What's New in Analytica 4.5? Be a beta tester We invite you to be a beta tester, and here is what we ask of you: You should have an internet connection. Beta licenses are automatically activated over the internet and the software needs to check for new … [Continue reading...]

## Estimation of Mutual Information

Abstract: This article explores the difficult problem of estimating the mutual information between two variables from a sample of data. I use examples to demonstrate the challenges, and introduce a new algorithm for estimating mutual information along with an explicit representation of its uncertainty. A measure of association is a function that rates the strength of statistical dependence between two variables. In casual talk, people often express this idea by asserting that two things are "correlated"; however, in statistics the term correlated has a more precise meaning, where … [Continue reading...]

## Never Tell Me the Odds?

In my last post, I discussed the meaning of expected value (EV) and how it's useful for comparing the values of choices we could make when the outcomes we face with each choice vary across a range of probabilities. The discussion closed by comparing the choice to play two different games, each with different payoffs and likelihoods. Game 1 returns an EV of $5, even though it could never actually produce that outcome; and Game 2 returns an EV of $4, also being incapable of producing that outcome. But let's say that you hate it when C-3PO tells you the odds, so you commit to Game 2 because … [Continue reading...]

## A Brief Explanation of Expected Value

When helping people analyze the risks they face in complex decisions, I frequently receive requests for an explanation of expected value, as expected value is a measure commonly used to compare the value of alternate risky options. I've found that by now most people understand the concept of net present value (NPV) rather well, but they still struggle with the concept of expected value (EV)*. Interestingly enough, and fortunately so, the two concepts share some relationship to each other that makes an explanation a little simpler. NPV is the means by which we consistently compare cash flows … [Continue reading...]