Business Decision Report: Software Selection for ACME Systems (2017)

This report presents a decision analysis for ACME Systems regarding software selection. It evaluates four software options (A, B, C, and D) based on their success rates, costs, and potential return on investment. The analysis includes the application of decision trees and the rollback method to determine the optimal choice. Software A is recommended due to its 100% success rate, ensuring operational efficiency and a lower long-term investment. The report also discusses the importance of normative or prescriptive decision theory in making informed business decisions and emphasizes the need to consider both immediate and long-term outcomes when evaluating different software options. The report highlights the importance of considering the success rate of the software in order to ensure a high return on investment.

9/21/2017
Analytical Thinking and Decision Making
Student Name

Contents
Q3 Apply Decision Analysis and Develop an Appropriate Decision Tree......................................................................................................................2
Q4 - Calculating the expected values and following the rollback method, outline the most suitable approach for iResearch. Discuss your
recommendations for the managers of iResearch.......................................................................................................................................................3
Advice on Selecting the Best Software......................................................................................................................................................................... 4

Q3 Apply Decision Analysis and Develop an Appropriate Decision Tree

Q4 - Calculating the expected values and following the rollback method, outline the most suitable
approach for iResearch. Discuss your recommendations for the managers of iResearch
Software Cost Success
Rate Remarks
Software
A $145,000 100%
overall
Least Risk and highest success rate, offering the
highest return on investment
Software
B $80,000 65%
web NON Considerable
Software
C $112,000 75%
overall
25% risk of not working which is relatively still high
when calculating the investment return
Software
D $92,000 45 web NON Considerable
Software B and D are directly eliminated from the evaluation due to them carrying a high failure rate thus ACME systems should not consider
these two options. This leaves AMCE systems with two options namely Software A and C which are viable and require closer research to
determine the most cost-effective and the one which will deliver the best return on investment.
Software A – offers a 100% success rate meaning ACME systems can be sure the software will function correctly without any glitches on both
computers and mobile device. Both platforms play an important role in business operations thus having a high success rate is critical towards the
registering a high rate of return on the investment.
Software C = offers a 75% success rate and investment of $112,000 but carried a risk of 25%. This translates to a direct risk of losing 25%
efficiency. When the cost of the software is calculated from a 100% success rate perspective the software is likely to cost $149,333.3333 which is
higher than Software A. it is also likely that ACME Systems will need to address the efficiency and success rate at a later stage which is likely to
cost additional fund to resolve the bugs which are likely to cost the business additional financed and losses in efficiency in operations and profits.

Normative or Prescriptive Decision Theory
To assist with making the most informed decision related to the business it is important to utilize the Normative or prescriptive decision theory
which allows for all elopements related to the products being compared based on their immediate and long term delivery outcomes. This
information’s is then used to determine the best choice to select so as to maximize output and financial gain from the evolution of different
available options.
Advice on Selecting the Best Software
After analysis of the above statistics, it is advisable for AMCE Systems to consider investing on Software A which offers a 1005 success rate, this
ensures the software will operate successfully on all platforms and gadgets which will help increase efficiency (Kallet, 2014). It is also likely to
cost the business less investment over the long term perspective due to the business one-time investment on the software system
References:
Kallet, M., 2014. Think Smarter: Critical Thinking to Improve Problem-Solving and Decision-Making Skills. New Jesrey: John Wiley & Sons.