# Decision Modeling & Analysis And Analysis

Good Essays

Decision Modeling & Analysis
“Business these days is all in the numbers, as franchises tap into the power of big data to customize marketing, select locations and manage staffing. These are the companies leading the charge” (Daley, 2016, p. 133). This is how today’s world works. However, just simply collecting data is not enough. What do you do with it, and how do you turn it into something meaningful? Competition is fierce, and being wrong is never a good option. Using terms like I think, hopefully, and that is the way we have always done it, is a good first step to going out of business and the unemployment line. Using proper business analysis techniques with reliable data will increase the likelihood that a prediction, or a …show more content…

Once a decision has been made (hopefully utilizing probability), the different outcomes can be displayed with their probability of occurring. For example, A business is wanting to develop a new product with the highest profit margin possible. The initial options are a cheap, midrange, or a high-quality product. Each has their own fixed material and labor cost. The first step in the decision tree is to determine the feasibility of making a profit at all. If after marketing samples are done and a low chance of success is determined, then the product should be abandoned during this first step. Otherwise, an option can be chosen. We will say that the mid-range product was chosen as the best option due to demand and cost. Next, it should be determined how well this product will sell, and how much product, or market share will be needed to be profitable, and by how much. Imputing this data into Excel or Precision tree can result in an expected monetary value which is the weighted average of all these choices (Albright, & Winston, 2017).
Distribution and Uncertainty.
Distribution, as in probability distribution, take probability one step further. In the previous example of rain, there is only two possible outcomes. Either it will rain, or it won’t. Unfortunately, most decisions are not that simple. Sometimes there are several choices to make, and the cheapest one is not always the best option. Probability distribution doesn’t necessarily present a