Decision Making with Quantitative Tools

Decision Making with Quantitative Tools - The term decision...

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Decision Making with Quantitative Tools Quantitative techniques help a manager improve the overall quality of decision making.  These techniques are most commonly used in the rational/logical decision model, but  they can apply in any of the other models as well. Among the most common techniques  are decision trees, payback analysis, and simulations. Decision trees decision tree  shows a complete picture of a potential decision and allows a manager  to graph alternative decision paths. Decision trees are a useful way to analyze hiring,  marketing, investments, equipment purchases, pricing, and similar decisions that involve  a progression of smaller decisions. Generally, decision trees are used to evaluate  decisions under conditions of risk. 
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Unformatted text preview: The term decision tree comes from the graphic appearance of the technique that starts with the initial decision shown as the base. The various alternatives, based upon possible future environmental conditions, and the payoffs associated with each of the decisions branch from the trunk. Decision trees force a manager to be explicit in analyzing conditions associated with future decisions and in determining the outcome of different alternatives. The decision tree is a flexible method. It can be used for many situations in which emphasis can be placed on sequential decisions, the probability of various conditions, or the highlighting of alternatives....
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