Decision Analysis for Management

Decision analysis deals with a set of techniques which clarify the basic logic of managerial decision-making. It provides models to interpret alternative strategies and analyzes their value and shortcomings. Models are only characterizations in theory and have value only to the extent they provide good approximations or, lead to optimality in some sense. Two simple ways of classification of models are: (a) do they lead to qualitative or quantitative decisions, and (b) are they deterministic or stochastic in their environment? For many real life decisions, it is very difficult to separate the qualitative and quantitative aspects of decision-making; likewise for the deterministic and stochastic aspects of the environment. Yet it will be presumed for the purpose of this book that such separations are possible.