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This chapter is from the book

An Overview of the Book

Here is a quick look at the topics that are covered in this book. The book is divided into eight parts:

  • Part I: Introduction and Foundations. This part introduces the subject and provides the background needed to understand the rest of the book. Topics include the fundamental concepts of business decisions, the business decision-making process, the time value of money (interest), financial equivalence, and ways to characterize proposed solutions including present worth, internal rate of return, and discounted payback period.

  • Part II: Making For-Profit Business Decisions. In this part, the basic mechanics of making business decisions in for-profit organizations are presented. Specific topics are for-profit decision analysis, the concept of economic life and its impact on planning horizons, and two special cases in for-profit decision analysis: replacement decisions and asset-retirement decisions.

  • Part III: Advanced For-Profit Decision Techniques. This part presents additional concepts and techniques that may be included in a for-profit decision analysis. These techniques don't always need to be applied; you would only use them when you need more precision in the decision analysis. The topics in this part are inflation and deflation, depreciation, general accounting, income taxes, and the consequences of income taxes on business decisions.

  • Part IV: Making Decisions in Government and Nonprofit Organizations. This part explains the concepts and techniques for decision making in government agencies and in not-for-profit organizations. Specific topics are benefit-cost analysis and cost-effectiveness analysis.

  • Part V: Present Economy. In this part, the concepts and techniques of break-even analysis and optimization analysis are discussed.

  • Part VI: Estimation, Risk, and Uncertainty. Estimation is an essential part of business decision analysis. This part goes into detail about the concepts and techniques of estimation and explains risk and uncertainty and how they can influence, and be addressed in, decisions.

  • Part VII: Multiple-Attribute Decisions. Parts I through VI explain how to make decisions when there is one decision criterion, money. Money will usually be the most important decision criterion, but it is often only one of several important decision criteria. This part presents several different techniques for addressing more than just one decision criterion, or attribute, in a decision analysis.

  • Part VIII: Summary. This part summarizes the book.

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