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The Power of Mathematical Modeling in Business Decision Making

Updated: Nov 5, 2020




On the contrary, Analysts can model difficult practical problems and offer insights into their potential impact on corporate decisions. In addition to the decisions about the operation of a particular business, many other factors play a role in decision-making. The constraints associated with budget, investment, and organizational considerations can make the decision-making process even more difficult for business.


To model complex systems, analyze the trade-offs between the most important system variables, identify robust solutions, and develop decision-support tools, operations research requires the use of mathematics to identify and analyze complex problems as they are expressed in everyday language, as well as to analyze trade-offs in key systems and variables, and to develop decisions and support tools. Mathematics is used in decision-making primarily in a language called mathematical modeling, in which we discuss the parts of a decision problem that can be described in numbers, similar to relationships or in sequence. Mathematical models can describe complicated decision-making problems, including those that affect the interactions between their components.


Mathematical modelling uses mathematics as the language in which we describe it and as a tool to dictate and control the decision-making process. The process of looking at a decision problem is a process in itself, not a set of concepts or rules that were invented for this purpose only. Mathematical modelling is therefore a language in its own right, not a concept or rule invented for this very purpose, as in the case of the rule of thumb.

The main objective of mathematical modelling of this process is to make the decision - to make the process more efficient, effective and transparent. One of the most important things that can be modelled with mathematical and statistical methods is the ability to select and use appropriate mathematics and statistics to analyze and better understand empirical situations and improve decisions.


When creating a mathematical model, the technology is able to vary assumptions, investigate consequences and compare predictions with data. The model can help explain the system, study the effects of different components and make predictions about behavior.

Mathematical models can take many forms, including mathematical equations, mathematical models, computer models and mathematical algorithms. Although a particular model includes a variety of abstract structures, other models may overlap in some ways.

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