Comments for Decision Making Data

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Apr 23, 2010
Decision Making Data
by: Dee Reavis

This is a little like real life. You have a project that only gives you a minimum amount of data. You have to come up with the rest of the data to make an analysis.

Let's see how we might get enough data to make an analysis. Suppose that our new product is a golf cart. It's life is based on the number of miles it is driven. When you do your research you find that there are 2 competitors that make golf carts that have a "moving life" of 25,000 miles and 30,000 miles respectively. The standard deviations are 5,000 in both cases. You also find the purchase costs to be $10,000 and $12,000. Now you must go back to your engineering and marketing department to decide on a price for your cart.

As you can see, it often takes a bit of research to start obtaining the necessary data to construct a model and make an analysis.

It is very important that you document everything. You want your analysis report to be show how you came up with every piece of data that you use. If someone (your boss) objects to your analysis, you can respond by asking, what data they would have used.

Good models plus good data equals good decisions.

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