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A chemical plant is due for a major overhaul and the manager has to make an assessment of a number of uncertainties associated with the project.
A chemical plant is due for a major overhaul and the manager
has to make an assessment of a number of uncertainties associated
with the project. These include the time the overhaul will take
to complete (after 35 days the losses of production caused by the
overhaul could have serious consequences for the company) and the
risks that there will be leakage of dangerous chemicals into local
watercourses during the cleaning process. The following extracts
have been taken from the manager's draft report which details plans
for the overhaul:
(i) 'I assessed the most likely duration of the overhaul to be 30 days.
I then tried to take an optimistic view and assumed that, if all
goes well, we could finish the work 5 days earlier than this (i.e.
in 25 days). I then took a pessimistic perspective and estimated
that the longest the project will take is 34 days. I am therefore
certain that we should complete the overhaul within 35 days.'
(ii) 'Essentially the overhaul will be split into eight independent
phases. I think the chances of us completing each phase without
a pollution problem are high, say 90%. Overall, I therefore
estimate that we have almost a 90% chance of avoiding a
pollution problem during the project.'
(iii) 'There must be a high chance that there will be no serious corrosion
in the main pump. The last five pumps we've inspected
at other plants were all corroded and the chances of getting six
corroded pumps in a row must be very low indeed.'
(iv) 'I'm mindful of the theft of equipment we had last week at our
Briston plant. If we don't take appropriate security precautions
I am virtually certain that we will lose important equipment in
this way during the overhaul, with possible disastrous effects
on our ability to complete the project within 35 days.'
(v) 'I estimated the probability of the West boiler requiring repair
to be about 10%.' (On a later page:) 'Given the likelihood of
seepage into the pipe feeding the West boiler, there must be a
high chance of this boiler being corroded. I therefore reckon that
there is a 50:50 chance that we will have to repair this boiler as
a result of the seepage and corrosion.'
Comment on these extracts from the report in the light of Tversky
and Kahneman's work on heuristics and biases.