Decision Model

What is a Decision Model?

Ideally, a decision model is defined as an intellectual template used to perceive, organize, and manage business logic (set of business rules leading to conclusions) behind a business decision. As a model of business logic, Von and Goldberg (2010) term the decision model as a model of conclusion derived from facts the business is focused on managing. Thus, a decision model is a model of conclusions such as assessments, classifications, and evaluations of business concerns that the business aims at storing business logic. 

Why is it Important to Business?

The decision model is an impetus for change in businesses. In particular, and according to Von and Goldberg (2010), the decision model has the potential to influence change in business management. It has the ability to enable business professionals to rethink of a different method about the way they view, design, manage, and execute business logic. Another way the decision model has been found important to business is that it enables nontechnical business people to interact naturally with the business logic. In return, it allows for a regular governance of business even with no knowledge of the technical aspect. Through the decision model, business leaders can view, value, and challenge their business logic even without automation.

What are the three types of inputs common to decision models?

Decision models have three types of inputs – data, uncontrollable variables, and decision variables. According to Evans and Basu (2013), data is a constant input in decision models and includes costs, machine capacities, or distance between cities. The second type of input – uncontrollable variables refers to quantities that are not constant and the decision has no control over them. Some examples of this type of inputs include demand, revenue, and inflation rates. The last type of input – the decision variables is controllable and the decision maker can influence its selection but discreetly. Some examples of decision variables input include staffing, allocation of investments, or production quantities.

References

Evans, J. R., & Basu, A. (2013). Statistics, data analysis, and decision modeling. Harlow: Pearson Education.Von, H. B., & Goldberg, L. (2010). The decision model: A business logic framework linking business and technology. Boca Raton: Auerbach.