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DECISION ANALYSIS BY ANALYTICAL MODELLING

Decisions needs to be analyzed for conditions and assumptions considered in the decision model. The process is executed through analytical modeling of problem and solution. The model is analyzed in four ways:

  1. What if analysis – Decisions are made using a model of the problem for developing various solution alternatives & testing them for best choice. The model is built with some variables and relationship between variables . in reality, the considered values of variables and relationships may not hold good and therefore solution needs to be tested for an outcome, if considered values of variables or relationship change. This method of analysis is called ‘what if analysis’.
  2. Sensitivity analysis – It is a special case of what if analysis in which only one variable is changed and rest are kept unchanged. It helps to understand the significance of variable in decision making and improves the quality of decision making.
  3. Goal achieving analysis – in this, the problem is analyzed in exactly reverse way as that of what if analysis or sensitivity analysis. In goal seeking analysis, the goal is fixed and the variables and values are analyzed, which would help to seek that goal. The work is done backward from the goal.
  4. Goal seeking analysis - in this, the goal is not fixed but the decision maker tries to achieve a goal of an optimum value arrived at after satisfying all constraints operating in the problem. The decision maker can use this analysis to work on constraints and resources and find ways to improve upon solution to seek highest goal.

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