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Industrial Project Management: A Handbook of Planning, Scheduling & Evaluation Techniques

Chapter 1 Decision modelling in management
1.1. Decision Modelling
Modelling decisions in management is a process of developing models reflecting the
interrelations between relevant factors in a real situation. The model is reality pre-
sented in a simplified form. Modelling is a specific method and means of comprehen-
sion. It is applied in company management to study various activity alternatives using
developed models. Every individual model comprises various components, variables,
parameters, relations, limitations and criteria [1].
Components correspond to the elements of the system under study.
Variables are used to describe the relations between individual components of
the model. They can have more than a single value [2].
Parameters characterize the influence that various variables have in the
model. They are constant for every individual model, i.e. they have just a sin-
gle value [2].
Relations reflect the links, relations and interaction between various compo-
nents, variables and parameters in the model [3].
Limitations point out the variation limits and can be either placed in space
and time, can be single-value or multi-value, one-sided or double-sided,
global or local, etc [4].
Criteria are means of evaluation, comparison and selection. They are objec-
tive and subjective, qualitative and quantitative [4].
The model reflects the nature, structure and functions of the original. It is its imaginary
or real duplicate. Its resemblance to the original is used as a basis of building up the
model and at the same time, a prerequisite for transferring the results of the experi-
ments carried out with the model to the original. According to their form of compre-
hension models are classified as theoretical and empirical. Depending on the chances
of implementation models can be fictional and material. According to the degree of
quantification models can be divided into qualitative and quantitative [5]. According to
the factors being reflected there are models based in space and time. Depending to the
structure being reflected models can be schematic, physical and mathematical.
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