Decision making model | Free template
Decision making model for decision making under uncertainty is a free template to evaluate the different options depending on the expected profit and probability. This decision making model implies that the alternative that gives the best expected value must be chosen.
In order to make good decisions a clearly defined problem with an indication of the factors causing the problem is required. When a decision should be made, specific and measurable goals should be set up; a model should then be established with the alternatives and evaluated regarding their effectiveness.
Decision making in business is normally under uncertainty since it is impossible to know anything about the future outcome. Uncertainty may be taken into account in decision making through the use of probabilities, and this requires that we somewhat well know the probability of different outcomes. Probability assessments can be based on historical statistical surveys.
In this template with a decision making model for decision making under uncertainty, a decision table is set up with alternatives for the decision and the probability for three different outcomes are estimated. For each alternative listed the profit expected under different market conditions are estimated and based on this the expected value for each option is calculated. The alternative with the maximum expected value is the option that usually should be selected when this option is the best alternative with regard to the relationship between reward and risk.
You can use this template for a decision making model to facilitate decision-making under uncertainty.
01/01/2015 | Created by All-templates.biz
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Tags: decision models evaluation financial calculations