What Is a Decision Model?

Decision models are mathematical models used for business decisions. Because the socio-economic system is complex and decision-making factors are criss-crossed, any decision maker can't make the optimal decision based on intuition and experience alone. Therefore, in modern scientific decision-making, the methods of natural science and mathematical tools are often used to establish the formulas and models of the relationships between decision variables to reflect the essence of decision problems and simplify complex decision problems. The general form of the decision model is V = F (Ai, Sj), where: Vvalue target; Aicontrollable decision factor; Sjuncontrollable decision factor. For example, a company has two factories that can produce both A and B products, but the production capacity is different, and the profit is also different. In order for an enterprise to have the best economic benefits, it is necessary to seek the optimal production strategy, that is, to make a production plan that maximizes the benefits. To this end, the decision model is listed first, and then the optimal one is obtained through the model. ^[1]

Decision model

Decision models are mathematical models used for business decisions. Because the socio-economic system is complex and decision-making factors are criss-crossed, any decision maker can't make the optimal decision based on intuition and experience alone. Therefore, in modern scientific decision-making, the methods of natural science and mathematical tools are often used to establish the formulas and models of the relationships between decision variables to reflect the essence of decision problems and simplify complex decision problems. The general form of the decision model is V = F (Ai, Sj), where: Vvalue target; Aicontrollable decision factor; Sjuncontrollable decision factor. For example, a company has two factories that can produce both A and B products, but the production capacity is different, and the profit is also different. In order for an enterprise to have the best economic benefits, it is necessary to seek the optimal production strategy, that is, to make a production plan that maximizes the benefits. To this end, the decision model is listed first, and then the optimal one is obtained through the model. ^[1]

along with

They are all implemented by computers and become practical decision-making methods, that is, mathematicalization and modeling of decision-making methods. Therefore, for more repetitive, such as routine management decisions, programs can be written using mathematical models and automated with computers to improve efficiency. However, the solution and management decisions of a large number of unstructured problems cannot be solved by mathematical models, but the important role of people in decision-making must be considered. This involves psychology, social psychology, and behavioral science. Therefore, the establishment of a mathematical model is only a method in the development of decision science.