Week 2 – Decision Analysis
Week 2 – Decision Analysis
Decision-making is a rather complex task. The process tends to involve a number of uncertain aspects that render it complex and difficult to manage. In situations that illustrate a complete lack of information, the process of establishing certain alternatives becomes authentic. In instances whereby there is a need to balance conflicting values, the application of decision-making takes place in relation to the implications that may arise from unseen risks and uncertainties. Organizations tend to encounter various risky situations that demand the selection and implementation of the best alternatives possible. In such circumstances, decision-making can either establish positive or negative outcomes depending on the nature of the problem. Therefore, in order to ensure that the best decisions with the best possible results are implemented in problem resolution, organizations apply decision-analysis as a means of assessing, analyzing, and determining the right decision to apply.
Decision analysis is mainly involves applying decision science to actual problems via the utilization of operations research and systems analysis. Accordingly, as a normative discipline, decision analysis offers a description or defines the way in which individuals and organizations can actually engage in the establishment of logical decisions. Specifically, the respective discipline corresponds to the routine ways that are implemented when persons as well as firms make decisions within simple situations (Goodwin & Wright, 2010). Based on such correspondence, decision analysis shows the manner in which such behaviors can be expanded logically towards increasingly convoluted situations. Moreover, the discipline, as a process offers a sequential procedure that proves rational and practical even in managing and handling the most complicated problems in an effective and organized way. This positive aspect of decision-analysis further depicts the significance of the respective process in most organizations.
Most organizations apply decision-analysis in order to determine which alternatives will produce the best results in the mitigation or resolution of a particular problem. In this case, the discipline is applied as a methodology based on the role it assumes within risky and uncertain contexts (Bell & Schleifer, 2005). Decision analysis offers a number of certain measures and tools that are often indispensable when it comes to carrying out the analysis of a specific decision problem. These measures comprise procedures for educing and creating influence diagrams, encoding utility curves and probability functions, and the development of decision trees. In this respect, decision analysis also allows space for the development of a methodical process that can be applied in the evaluation of these trees as well as participate in the acquisition of information that will be effective sufficiently in refining the analysis further (McNamee & Celona, 2011).
The decision tree is an important part of the decision analysis problem. These procedures tend to comprise measures that are used in the analysis of problems that contain probabilities, risks, or uncertainties. In description, the decision tree is actually a visual representation that comprises branches and nodes. The tree usually goes towards the right from the left by starting with a choice node (root decision node). On the other hand, the branches represent a pair or more competing alternatives that are accessible to the entities involved in the decision making process. At the culmination of these respective branches, the value node (end node) is visible and signifies a fixed value (Golub, 2007). The decision tree can be used to improve decision-making based on the way it uses values and probabilities in order to evaluate each alternative that is available to the decision-making entity.
In conclusion, decision analysis assumes a significant role in the process of decision-making. Organizations tend to use the procedure as a means of assessing and evaluating alternatives in order to determine the best solution for resolving a problem. Even though the respective process includes a variety of measures, the decision tree is particularly popular based on the way it assigns probabilities and values while attempting to determine the best alternative possible.
Bell, D. E., & Schleifer, Arthur. (2005). Decision-making under uncertainty. Cambridge, MA: Course Technology.
Golub, A. L. (2007). Decision analysis: An integrated approach. New York, NY: Wiley.
Goodwin, P., & Wright, G. (2010). Decision analysis for management judgment. Chichester, NY: John Wiley & Sons.
McNamee, P., & Celona, J. (2011). Decision analysis for the professional. Menlo Park, CA: SmartOrg.