All Dynamic Decision Problems Are Created with Equal Structure

Abstract

The recent progress of information and communication technology has led to a significant change in the business operations of many companies. More than ever before, operations are exposed to a continuous flow of incoming information such as online customer orders or price changes. As a consequence, the success of a company heavily depends on its capability to adapt its operations quickly and efficiently to newly arriving information. The capability to adapt is determined to a large extent by the ability to understand operations as dynamic decision problems and to manage them accordingly. Although dynamic decision problems occur in a large variety of different industries, they share one common structure. In this contribution we give examples of dynamic decision problems, unveil their common structure, and show that proper modeling is key to effective problem solution.