Essay on Decision Making

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Accounting 707
Chapter 1 HW

1. Decision analysis is evaluating numerous possible courses of action and choosing the best course of action. One of the most effective ways to analysis and evaluate decision alternatives involves using electronic spreadsheets to build computer models of the decision problems faced.

2. Computer modeling is a set of mathematical relationships and logical assumptions implemented in a computer as a representation of some real-world decision problems or phenomenon.

3. Spreadsheet modeling gives someone the opportunity to analyze alternative decisions before having to choose a specific plan for implementation.

4. Management science is a field of study that uses computer statistics and mathematics to solve business problems and to assist in the decision analysis process.

5. A variety of techniques from the field of management science can be applied in spreadsheet models to assist in the decision analysis process.

6. Everyone who uses spreadsheet today for model building and decision making is a practitioner of management science whether they realize it or not.

7. Using a spreadsheet model a business person can analyze decision alternatives before having to choose a specific plan for implementation.

8. The models are usually simplified version of the object or decision problem they represent. It is often less expensive to analysis decision problem. It often delivers the needed information on a timelier basis. Models are helpful in examining things that would be impossible to do in reality. Models allow us to gain insight and understanding about the object or decision problem under investigation.

9. Dependent variable is for example profits. It is dependent on other variables such as expenses and revenues. However revenues and expense react will affect profits.

10. Independent variable is for example revenues and expenses. It is independent compared to other variables and will affect dependent variable. It is not dependent on any other variables.

11. Yes, a model can have more than one dependent variable. Each of the variables represents a bottom-line performance measure that the manager might be interested in that should be included in the model.

12. Yes, in some decision problems a manager might be interested in evaluating various alternatives on the basis of profit, probable number of injuries, resulting amount of toxic waste produced, etc.

13. Prescriptive models tell managers what actions to take while descriptive models simply describe the operation of a system. In descriptive models, the values to be assumed by one or more independent variables are uncertain and not under the decision maker's control.

14. Prescriptive models tell managers what actions to take while predictive models provide forecasts of what will happen in the future. In predictive models, the functional form () describing the nature of the relationship between the dependent and independent variable is unclear.

15. Descriptive models have a well-defined functional form, but the values of one or more of the independent variables are unknown or uncertain. In predictive models, the values of the independent variables are known or under the decision maker's control, but the functional form () describing the nature of the relationship between the dependent and independent variables is unclear.

16. Description is to summarize the features, characteristics or behavior of some object. Prediction is an estimate or forecast of what will occur in the future. Prescription is directions, orders, or advice on how to solve a problem.

17. One mental problem is what route to take home from work. There are many different routes that could be taken that might influence the total distance or total length of
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