BUSN 625 CTC Decision Model Why Is It Important to Business Discussion & Responses

User Generated

QnqqlFunex

Business Finance

BUSN 625

Central Texas College

BUSN

Description

Complete the discussion and responses below

What is a decision model? Why is it important to business? What are the three types of inputs common to decision models?

POST

Student one:What is a decision model? Why is it important to business? What are the three types of inputs common to decision models?According to our text, a decision model is something that can be used to understand, analyze, or facilitate making a decision. (Evans, 2013) Basically, I would say that it provides a summary or an overview, for the manager, to enable them to make a decision.Decision models generally have three types of inputs:Data, which are assumed to be constant, such as costs, machine capacities.Uncontrollable variables, quantities can change but cannot be directly controlled by the decision maker, such as customer demand, inflation rates and investment returns.Decision variables, which are controllable and can be selected at the discretion of the decision maker, such as production quantities, staffing levels and investment allocations. (Evans, 2013)A decision model is important to businesses because it provides the manager with the necessary information, in an understandable manner, to make an educated decision,  “A model helps managers to gain insight into the nature of the relationships among components of a problem, aids intuition, and provides a vehicle for communication.” (Evans, 2013) They are useful for all types of businesses, new and old, “A good business model remains essential to every successful organization, whether it’s a new venture or an established player.” (Magretta, 2002)Decision models are important, but they are not a perfect option. They are not necessarily easy to produce, “Building decision models is more of an art than a science.” (Evans, 2013) Also, following a decision model doesn’t guarantee a successful outcome. The data may change, even though it was assumed to be constant. An uncontrollable variable could change differently than predicted in the model. Managers must keep these things in mind throughout the process, “It is important to understand that all models are only representations of the ‘real world’, and as such, cannot capture every nuance that decision makers face in reality.” (Evans, 2013) Evans, J. R. (2013). Statistics, Data Analysis, and Decision Modelling, 5th Edition. Saddle River, New Jersey: Pearson Education Inc.Magretta, J. (2002). Why Business Models Matter. Harvard Business Review. Retrieved from https://hbr.org/2002/05/why-business-models-matterStudent two:A decision model is a “template for perceiving, organizing and managing the business logic behind a business decision.” (Halle & Goldberg, 2011) A more formal definition is where a business “derives a conclusion from facts.” (Halle & Goldberg, 2011) It is not a list, it is a mode that represents the design of the outcome from the analysis performed. It should be easy to interpret and mange. It keeps information organized. It is important to business because, it comes from the research done with the conclusion from all the data. It maps out the thought process for a change or reason why things are done a specific way. It is the example clearly drawn out to implement change. A manager can put all the pieces from the hypothesis, data research and conclusion together into a plan, decision model. This map will assist the team of employees that will put this plan into effect.3 types of inputs common to decision models are data, uncontrollable variables and decision variables.Information or data is a requirement of any decision making. It can be reference data, supporting information or transaction the decision relates to. (Taylor, 2019)Uncontrollable variables can be something like weather or accidents. A decision model can show, if this happens we do this. It is being prepared for the unexpected.Decision variables are numbers of employees, hours of labor, quantities needed, etc.ReferenceHalle, B. & Goldberg, L., (2011). What is the Decision Model? IT performance improvement. Retrieved from http://www.ittoday.info/ITPerformanceImprovement/Articles/2011-03VonHalleGoldberg.htmlTaylor, J. (2019). The Role of Decision Modeling in Business Decision Management. Retrieved from https://www.bpminstitute.org/resources/articles/role-decision-modeling-business-decision-managementStudent three:A decision model is used to capture all of the important aspects of a problem within a business. The information is then used to make decisions about the business by analyzing and understanding the problem. There are three types of inputs that go into a decision model. Data which could be things such as cost, or time and it is also constant within the decision model. There are the uncontrollable variables.  Uncontrollable variables are quantities that can change but not by those making the decisions. Examples of these things can be inflation rates or interest rates. Lastly are the decision variables that can be controlled by the decision maker. Those things can be the number of employees working or supplies available to do the job. The decision model shows the relationship between the data, uncontrollable data, and the decision variables (Evans, 2013).A business model helps to provide insight into what is going on in the company and helps to show where change need to be made or where improvement can be made to optimize profit (Evans, 2013). Although there maybe an idea where change should take place looking at a model helps to simulate real world activities to get a better idea of what is going on. For instance, management may think that a group of people is faster at performing their job because of the way they actually do the job but after creating a business model they realize that another unforeseen factor was actually behind how quick they were able to produce.  Decision models helps to factor in all variables so that an understanding of what is going on can be reached. Although a decision model only provides a simulation of what can happen in a real-world situation it does shed light on things outside of just being intuitive.Evans, J. R. (2013). Statistics, data analysis and decision modeling (5th ed.). Cincinnati, OH: Pearson EducationLandsheer, J. (2017). Decision modeling: what is it, and why does your business need it? Retrieved This week's lesson on decision models, risk analysis, and the Monte Carlo simulation provide a deeper understanding of how decisions are made and what all is considered when making decisions. What is a decision model? A decision model helps support structuring problems, defines variables, identifies factors that influence the decision, and provides multiple plans of action. Both quantitative and qualitative data can be used with decision-making models to help come up with a solution. For a decision model to be effective, the data inputted must be correct. Having more data increases the probability that the solutions provided will be successful. Why is it important to business? A business having the capability to take data and predict what the most successful plan of action saves a business time and money. Knowing how a decision will impact a business allows managers to take corrective actions in the event that something unexpected was to occur. For example if a business was planning to open up another store they could use a decision making model to determine how it will impact the income of the company overall. The number of customers that travel across town to go to the original store could then shop at the new store, would the increase in revenue be able to cover the increase in costs associated with a new store, and are there any other solutions such as move the store to a larger location or is it best to stay the same size. Business managers could also use a Monte Carlo Simulation that uses random variables to provide multiple decisions for multiple inputs. What are the three common types of inputs? Data, which is traditionally assumed to be constant factors such as costs and production limitations. Uncontrollable variables are quantities that are not controlled by the company and can change at any time. Decision variables are controllable by the company and can be changed on demand, such as the number of employees and inventory amounts.Evans, J. R. (2013). Statistics, data analysis, and decision modeling (5th ed.). Upper Saddle River, NJ: Pearson.Proctor, S. (2012). monte carlo simulation. Financial Management, 53–55. Retrieved from http://search.proquest.com/docview/923668906/Venugopalan, J., Sarath, V., Pillai, R., Krishnan, S., & Anbuudayasankar, S. (2014). Analysis of Decision Models in Supply Chain Management. Procedia Engineering, 97(C), 2259–2268. https://doi.org/10.1016/j.proeng.2014.12.470

Explanation & Answer:
300 Words Discussion
4 discussion responses 175 words each
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer

Hello, your work is complete. Please have a look at it and let me know if you need any correction before you submit it.

Running Head: DISCUSSION

1

BUSN625 DISCUSSION

Name
Institution Affiliation
Date

DISCUSSION

2

According to Von Halle (2016), a decision model is basically a conceptual template that
is used to manage to organize, and perceive business decisions as well as business logic.
Business logic, in this case, refers to the different forms of laws that have been laid across to be
followed in every business. These rules usually guide the company or any business to draw
meaningful and useful conclusions based on facts at hand. A decision model is the...


Anonymous
Awesome! Made my life easier.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Related Tags