In practical life, we have to continually make decisions. Making decisions are required for solving problems so that we can increase our opportunities and make life much easier and beneficial. There are many alternatives for making decisions, but making a rightful decision is a harder task. Evaluating these alternatives and choosing the best course of action represents the main essence of decision analysis.
For analyzing various decision alternatives, we have to make models.
A model is an abstract, physical, or visual simplified replica with all features of a real object or situation.
A mathematical model is a model, which uses mathematical relationships to describe or represent an object or decision problem.
Benefits of modeling
Models are beneficial, because it is a simplified version of real object or situation, and useful to understand the real object or situation as long as it is valid. A valid model is that model, which represents the accurately the necessary characteristics of the object or problems being studied.
Models help to gain understanding about the real object or a situation, and thus help in decision-making.
Profit = Revenue – Expenses
Y =f (x1, x2, x2, …., xk)
Where x1, x2, x2, …., xk Independent variables
Y dependent variable
Estimates of ind. Variables have to be made to predict the dep. variable
There is uncertainty in the ind. Variables, this model describes the outcome or behavior of a given operations
Taking different values of ind. Variables prescribes best possible Value for dependent variable
The Problem –solving Process Modeling is a part of the problem-solving process. Modeling