decision model


decision model
A model that simulates the elements or variables inherent in a business decision, together with their relationships to each other and the constraints under which they operate; the purpose of the model is to enable a solution to be arrived at in keeping with the objectives of the organization. For example, a linear programming decision model may arrive at a particular production mix that, having regard to the constraints that exist, either minimizes costs or maximizes the contribution. Other decision models include decision trees, discounted cash flow, breakeven analysis, and the payback period method

Accounting dictionary. 2014.

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