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Models and Managers: The Concept of a Decision Calculus

  • John D. C. Little

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

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    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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    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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