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Models and Managers: The Concept of a Decision Calculus

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  • John D. C. Little

    (Sloan School of Management, M.I.T.)

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    Abstract

    A manager tries to put together the various resources under his control into an activity that achieves his objectives. A model of his operation can assist him but probably will not unless it meets certain requirements. A model that is to be used by a manager should be simple, robust, easy to control, adaptive, as complete as possible, and easy to communicate with. By simple is meant easy to understand; by robust, hard to get absurd answers from; by easy to control, that the user knows what input data would be required to produce desired output answers; adaptive means that the model can be adjusted as new information is acquired; completeness implies that important phenomena will be included even if they require judgmental estimates of their effect; and, finally, easy to communicate with means that the manager can quickly and easily change inputs and obtain and understand the outputs. Such a model consists of a set of numerical procedures for processing data and judgments to assist managerial decision making and so will be called a decision calculus. An example from marketing is described. It is an on-line model for use by product managers on advertising budgeting questions. The model is currently in trial use by several product managers.

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    File URL: http://dx.doi.org/10.1287/mnsc.16.8.B466
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    Bibliographic Info

    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 16 (1970)
    Issue (Month): 8 (April)
    Pages: B466-B485

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    Handle: RePEc:inm:ormnsc:v:16:y:1970:i:8:p:b466-b485

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    Cited by:
    1. Srinivasan, V. "Seenu" & Park, Chan Su & Chang, Dae Ryun, 2005. "An Approach to the Measurement, Analysis, and Prediction of Brand Equity and Its Sources," Research Papers 1685r2, Stanford University, Graduate School of Business.
    2. Teck H. Ho & Noah Lim & Colin Camerer, 2005. "Modeling the Psychology of Consumer and Firm Behavior with Behavioral Economics," Levine's Bibliography 784828000000000476, UCLA Department of Economics.
    3. Evelyne Poincelot & Dominique Poincelot, 2007. "Les sociétés cotées en France préparent-elles le marché à l’augmentation de leur capital par les rachats de leurs propres actions?Do french quoted firms repurchase stocks in order to prepare t," Working Papers CREGO 1071105, Université de Bourgogne - CREGO EA7317 Centre de recherches en gestion des organisations.
    4. Little, John D. C., 1973. "Brandaid II," Working papers 687-73., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    5. Urban, Glen L. & Roberts, John H. & Hauser, John R., 1986. "Prelaunch forecasting of new automobiles : models and implementation," Working papers 1820-86., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    6. John R. Hauser & Steven Shugan, 1978. "Intensity Measures of Consumer Preferences," Discussion Papers 291, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    7. Little, John D. C., 1993. "On model building," Working papers 3556-93., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    8. J. S. Armstrong & R. Brodie & S. McIntyre, 2005. "Forecasting Methods for Marketing:* Review of Empirical Research," General Economics and Teaching 0502023, EconWPA.
    9. Maki, Wilbur R., 1981. "Socioeconomic Models For Development Planning, I: Validatioin Methods," Staff Papers 14064, University of Minnesota, Department of Applied Economics.
    10. Aude Deville & Gary D. Ferrier & Hervé Leleu, 2009. "Performance measures for hierarchical organizations: Frontier analysis as a decision support tool," Working Papers 2009-ECO-01, IESEG School of Management.
    11. Aude Hubrecht-Deville & Hervé Leleu, 2007. "Performance measures of retail banking networks: a decision support tool," Working Papers CREGO 1071203, Université de Bourgogne - CREGO EA7317 Centre de recherches en gestion des organisations.
    12. Linda Ellis Johnson & Arnold L. Redman & John R. Tanner, 1997. "Utilization and Application of Business Computing Systems in Corporate Real Estate," Journal of Real Estate Research, American Real Estate Society, vol. 13(2), pages 211-230.
    13. Enrique Yacuzzi & Víctor M. Rodríguez, 2002. "Diseño e implantación de un sistema de apoyo a las decisiones basado en el modelo de transporte," CEMA Working Papers: Serie Documentos de Trabajo. 214, Universidad del CEMA.

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