Modern Management: concepts and skills, 14/e

Decision-Making Tools

Most managers develop an intuition about what decisions to make—a largely subjective feeling based on years of experience in a particular organization or industry, which gives them insights into decision making for that industry or organization.³⁴ Although intuition is often an important factor in making a decision, managers generally emphasize more objective decision-making tools. The two such most widely used tools are probability theory and decision trees.³⁵

Probability Theory

Probability theory is a decision-making tool used in risk situations—situations in which decision makers are not completely sure of the outcome of an implemented alternative.³⁶ Probability refers to the likelihood that an event or outcome will ...