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Unit 5: Modeling and Analysis
with a given probability of occurrence. The decision maker can asses the degree of risk associated Notes
with each alternative (calculated risk).
Risk analysis can be performed by calculating the expected value of each performed alternative
and selecting the one with the best expected value.
Self Assessment
Fill in the blanks:
5. In decision making under ..........................., it is assumed that complete knowledge is assumed
available – the decision maker knows exactly what the outcome of each course of action
will be.
6. In decision making under ..........................., the decision maker considers situations in which
several outcomes are possible for each course of action.
7. ........................... can be performed by calculating the expected value of each performed
alternative and selecting the one with the best expected value.
5.4 MSS Modeling in Spreadsheets
Models can be developed and implemented in a variety of programming languages and systems:
from third, fourth, and fifth-generation to Computer Aided Software Engineering (CASE) systems
and other systems that automatically generate usable software. We focus primarily on
spreadsheets, model languages, and transparent data analysis tools – the most popular end-user
modeling tool. Spreadsheets include extensive statistical, forecasting, and other modeling and
database management capabilities, functions and routines.
Example: Examples of excel spread sheet static model and dynamic model are shown in
figure 5.2 and figure 5.3 respectively.
Figure 5.2: Excel Spreadsheet Static Model – Example of a Simple Loan
Calculation of Monthly Payments
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