Another Decision Analysis tool is called an influence diagram. It provides a graphical presentation of a decision situation. It also serves as a framework for expressing the exact nature of relationships. The term influence refers to the dependency of a variable on the level of another variable. An influence diagram maps all the variables in a management problem. Influence diagrams use a variety of geometric shapes to represent elements.
The following conventions for creating influence diagrams were suggested by Bodily (1985) and others.
The three types of variables are connected with arrows that indicate the direction of the influence. The shape of the arrow also indicates the type of relationship. Preference between outcome variables is shown as a double-line arrow. Arrows can be one-way or two-way (bi-directional). Influence diagrams (see Figure 9.4) can be constructed at any degree of detail and sophistication. This type of diagram enables a model builder to remember all of the relationships in the model and the direction of the influence.
Several software products are available that help users create and implement influence diagrams. Some products include: DAVID that helps a user to build, modify, and analyze models in an interactive graphical environment; and DPL (from ADA Decision Analysis, Menlo Park, CA) that provides a synthesis of influence diagrams and decision trees.