Journal of Hotel and Business Management
Open Access

Complex Informational Relationships in Decision Model

Jassie Erec^{* *}Correspondence: Jassie Erec, Department of Hotel and Business Management, Jamia Millia Islamia University, Jamia Nagar, Okhla, New Delhi, India, Email:

Author info »

Description

The most crucial qualities a decision facilitator must possess are clarity of thought and common sense. Many applications of decision analysis do not necessitate complex mathematics or highly specialised interviewing abilities.

There are, of course, some decision analysis issues that reach the pinnacles of mathematical complexity and serve as the basis for Ph. D. theses. And everybody involved in the decision-making process needs to have the capacity to interact with others diplomatically and lead group discussions.

One of the distinguishing characteristics of decision analysis is the clarity of presentation using probabilistic terminology. Probability is the natural language to uncertainty, and we must face the reality of uncertainty and be able to articulate it.

Complex information systems

This influence diagrams to illustrate the current level of knowledge. Even when states of information are related in a complex way, influence diagrams provide an intuitively clear approach to portray this knowledge.

The mathematical constructions known as influence diagrams adhere to precise mathematical laws. A number of examples are used to present and illustrate important definitions and rules that have a practical application.

Every decision facilitator must complete the duty of gathering uncertainty-related information. Experience has also taught us that we are not particularly adept at communicating our current level of understanding on uncertainty. The decision facilitator needs to develop strategies for handling issues that arise when gathering knowledge concerning uncertainty. The root causes of the issues are examined, and solutions to the issues are presented.

Reliable information in decision model

Only equations are used in the calculation portion, even if the outcomes of these computations are, of course, presented as numbers. The facilitator has automatically parameterized the inputs for subsequent analysis by setting up the spreadsheet in this way, and he has also ensured that he can quickly skim over the entire list of data inputs.

Some programmers are used to entering a string of numbers to represent a time series, such as projections of sales volumes for the next 10 or 20 years, especially those who work with spreadsheets. These strings of numbers should be parameterized to help comprehend the results and model the uncertainty. Instead of entering 10 or 20 digits, we could instead input an initial value and a growth rate for the sales volume. As a result, decision analysis could require programmers to adapt their approach to writing code, particularly if spreadsheets are involved.

The modelling recommendations in the following sentences could seem apparent to some people. We have found that mistakes in these areas happen surprisingly frequently, nevertheless.

Modeling profit: Modeling the evolution of revenue and expenditure must be done with care.

Profit is particularly sensitive to the specifics of modelling because it is a minor difference between these two larger values. It is often preferable for firms to predict costs and margin (or revenue and margin) as opposed to revenue and costs separately.

Shutting down the business: The business should shut down when margins are negative for more than a few years by having a cutoff in the models. Moreover, models should incorporate safeguards against implausible or unrealistic scenarios, like a market share that exceeds 100%. Keep in mind that the decision tree will test the model in a variety of extreme scenarios, and that unexpected values might appear in these situations, skewing the final results.

Conclusion

Even though 10 to 15 years are explicitly taken into account by the model, up to 50% of the net present value of a business may come from the time period outside of that. This specifically occurs during the introduction of new products and during R and D. Therefore, it is typically crucial to explicitly specify a value for the business that extends beyond the model's time frame. Its value could be calculated as a salvage value (calculated from assets, including working capital) or as a selling value (perhaps represented as a multiple of cash flow in the last year taken into account). Remember that no firm exists in perpetuity and that switching to new forms of the business may demand sizable fresh capital inputs when calculating this value of the business.