Decision Analysis

By Huy T.

We all know that decision-making is one of the hardest things in life. People make decisions when they already know what to do; however, there are critical moments when we have to make decisions without knowing what to do. Good decisions solve the problems that a person or a company is facing; good decision-making can also save a company from failing. For example, Apple made the right decision to hire Steve Job back in 1997, and that was “one of the greatest decisions of all time” (Kruse, 2013). Bad decisions can cost business millions of dollars or even kill the business. For example, Walter A. Fallon, Kodak’s former CEO, decided to stick with film camera when he got internal reports that showed the rise of digital pictures and cameras in 1981, and because of his decision, “Kodak missed out on the digital revolution and filed for bankruptcy protection in 2012 (Derousseau, 2015). This is when decision analysis takes role.

Decision analysis is the last phase in the Functional Analysis System Technique (FAST) with the purpose of finding the best solution. It is a management technique in which statistical tools are applied to the mathematical models of real-world problems to discover the most advantageous alternative under the circumstances. By applying decision analysis techniques, decision makers are sure that they have accounted for uncertainties and critical results.

People with good decision analysis skill are needed because everyone tends to act on intuition and guessing; they usually make bad decisions in complex and uncertain situations. Companies have been using different decision analysis software such as: Salesforce Analytics Cloud, Vanguard System, D-Sight CDM, etc., but the most well-known decision analysis tool is decision tree. (Hollar, 2011)

Decision tree is a decision analysis tool that uses a tree-like model of decision and their consequences. However, just like other tools, decision tree has its advantages and disadvantages. The advantages of decision tree are: easy to use/understand, the tree structure provides a framework for analyzing all possible alternatives for a decision, decision trees help the user think of all possible outcomes and choices, and automatic prioritization, “the top nodes of the tree are the most important because they determine the subsequent decision to be made” (Sullivan, n.d.). On the other hand, decision tree still bears its disadvantages; they are: instability—the change in data of the “branches” can cause a lot of changes to the tree, complexity—a problem that is commonly seen in large trees with many branches and lead to time consuming, information overload—“decision makers burdened with information overload takes time to process information, slowing down decision-making capacity” (Nayab, 2011).

Decision analysis is obviously important; therefore, choosing the right tool is also a crucial part in the system. Without a well-prepared and good decision analysis, a project or even a company could face its major downfall. With all that being said, choosing the right tool requires necessary knowledge and visions; also, most companies would buy their decision analysis tools depend on the type of decisions that the companies are making.

Work Cited

Derousseau, R. (2015, September 28). The four horsemen of bad decision making. Retrieved from

Hollar, K. (2011, October 13). What are some examples of popular decision analysis tools used in enterprises? Retrieved from

Kruse, K. (2013, May 22). The Top 5 Business Decision Of All Time. Retrieved from

Nayab, N. (2011, February 9). Disadvantages to Using Decision Trees. Retrieved from

Sullivan, D. (n.d.). What Are the Advantages of Decision Trees? Retrieved from