Decision

Analysis
By : Anantya Khrisna Seta ( 2202221015 )
 What is Decision Analysis?

Decision analysis is a methodical and

logical process for evaluating
alternatives and making decisions in
the face of uncertainty

Because the primary goal of decision

analysis is to assist individual /
organization in making informed &
effective decision in the face of
uncertainty
 What is Decision Analysis? Cont’d

Decision analysis concentrates on one feature

that underlies all decision-making issues,
namely

1) A sense of urgency to complete a task

2) There are several options, but only one
must be chosen
3) The results of various options have
distinct effects.
4) Uncertainty about the outcomes of each
alternative
5) Not all potential outcomes are worth the
same amount.
 Why Decision Analysis Important?
1. Rational Decision Making ,according to Von Neumann and Morgenstern (1947), offers a logical framework for
making decisions that considers all pertinent data, weighs all potential outcomes, and selects the best course
of action.
2. Management of risk and uncertainty in decision-making: Decision analysis is crucial for managing risk and
uncertainty in decision-making, according to Savage (1954). Decision analysis assists decision-makers to
make informed judgments in uncertain circumstances by offering a systematic method for assessing uncertain
outcomes and their related probabilities..
3. Consistency and transparency: Decision analysis is crucial for guaranteeing consistency and transparency in
decision-making, according to Prat et al. (1964). Decision analysis aids in ensuring that decisions are made
consistently and openly by offering a clear framework for assessing alternatives and choosing the optimal
choice based on predetermined criteria.
4. Definition of values and goals: Decision analysis is crucial for defining values and goals, according to Keeney
(1982). Decision analysis helps to guarantee that decisions are in line with the values and goals of
stakeholders by offering a structured method for identifying and prioritizing objectives, weighing trade-offs
between them, and choosing the optimal alternative based on preferences and values.
 Methodology Of Decision Analysis
Methodology of decision analysis will be decomposed into four
steps :

1. Structure the decision problem

2. Asses possible impact of each alternatives
3. Determine preferences (values) of decision makers
4. Evaluate and compare alternatives
Methodology Of Decision Analysis
 Benefits of Decision Analysis
1. Objectivity: Decision analysis offers a methodical and objective approach to choosing, which
minimizes the influence of prejudice and emotions.
2. Clarity: Decision analysis helps to explain the important concerns and elements that need to
be taken into account by breaking difficult decisions down into smaller, more manageable
portions.
3. Transparency: Decision analysis increases the transparency of the decision-making process by
enabling stakeholders to comprehend the justification for the choice and the trade-offs
involved.
4. Flexibility: Decision-makers can take into account a variety of options and scenarios when
using decision analysis, which enables them to find and weigh solutions they might not have
otherwise thought of.
5. Consistency: By offering a clear framework for assessing alternatives and choosing the optimal
option based on predetermined criteria, decision analysis helps to promote consistency in
decision-making.
 Pitfalls Of Decision Analysis?

Decision analysis is vulnerable to the same flaws as

other approaches designed to aid decision makers.
These pitfalls are classified as follows:

1. Weak or no Logical or Theoretical foundations

2. Lack of consideration of subjective and value
component of decision problems
3. A claim that analysis provides a solution to the
decision problem
4. Poor Analysis
5. Weak personal interaction Skill.
 Application Of Decision Analysis

Several disciplines, including business, engineering, healthcare,

and public policy, can benefit from the use of decision analysis.
Among other things, it can be used to decide on investments,
project management, risk management, resource allocation, and
strategic planning.

Decision analysis offers an organized and methodical approach to

decision-making in each of these areas, which can assist people and
organizations in making better informed and efficient decisions.
Through decision analysis, people and organizations may assess
options, think through potential outcomes, and choose the optimal
choice based on the set criteria, producing better results and
greater success.
Thanks