Decision Analysis Framework
A Step-by-Step Decision Process
A structured approach improves decision quality and reduces the chance of overlooking important information.
- Define the decision problem.
- Identify all feasible alternatives.
- Determine relevant revenues and costs.
- Prepare a differential analysis.
- Evaluate qualitative factors.
- Choose the alternative with the greatest overall benefit.
Note
Qualitative considerations such as customer satisfaction, employee morale, legal issues, and environmental impact may outweigh purely financial results.
Summary
Successful decisions combine quantitative analysis with sound managerial judgment.