An Invitation to Portfolio Decision Analysis

Multicriteria decisions and portfolio analysis: land acquisition for biological and social objectives

Resource allocation for land acquisition is a common multiobjective problem that involves complex trade-offs. The National Wildlife Refuge System (NWRS) of the U.S. Fish and Wildlife Service currently uses the Targeted Resource Acquisition Comparison Tool (TRACT) to allocate funds from the Migratory Bird Conservation Fund (MBCF; established through the Migratory Bird Hunting and Conservation Act of 1934) for land acquisition based on cost-benefit analysis, regional priority rankings of candidate land parcels available for acquisition, and the overall biological contribution to duck population objectives. However, current policy encourages decision makers to consider societal and economic benefits of lands acquired, in addition to their biological benefits to waterfowl. These decisions about portfolio elements (i.e., individual land parcels) require an analysis of the difficult trade-offs among multiple objectives. In the last decade the application of multicriteria decision analysis (MCDA) methods has been instrumental in aiding decision makers with complex multiobjective decisions. In this study, we present an alternative approach to developing land-acquisition portfolios using MCDA and modern portfolio theory (MPT). We describe the development of a portfolio decision analysis tool using constrained optimization for land-acquisition decisions by the NWRS. We outline the decision framework, describe development of the prototype tool in Microsoft Excel, and test the results of the tool using land parcels submitted as candidates for MBCF funding in 2019. Our results indicate that the constrained optimization outperformed the traditional TRACT method and ad hoc portfolios developed using current NWRS criteria.

Identification of Protective Actions to Reduce the Vulnerability of Safety-Critical Systems to Malevolent Intentional Acts: An Optimization-Based Decision-Making Approach

An empirical classification model based on the Majority Rule Sorting (MR-Sort) method has been previously proposed by the authors to evaluate the vulnerability of safety-critical systems (in particular, nuclear power plants [NPPs]) with respect to malevolent intentional acts. In this article, the model serves as the basis for an analysis aimed at determining a set of protective actions to be taken (e.g., increasing the number of monitoring devices, reducing the number of accesses to the safety-critical system) in order to effectively reduce the level of vulnerability of the safety-critical systems under consideration. In particular, the problem is here tackled within an optimization framework: the set of protective actions to implement is chosen as the one minimizing the overall level of vulnerability of a group of safety-critical systems. In this context, three different optimization approaches have been explored: (i) one single classification model is built to evaluate and minimize system vulnerability; (ii) an ensemble of compatible classification models, generated by the bootstrap method, is employed to perform a "robust" optimization, taking as reference the "worst-case" scenario over the group of models; (iii) finally, a distribution of classification models, still obtained by bootstrap, is considered to address vulnerability reduction in a "probabilistic" fashion (i.e., by minimizing the "expected" vulnerability of a fleet of systems). The results are presented and compared with reference to a fictitious example considering NPPs as the safety-critical systems of interest.