Importance Of Business Decision Making

1.0 Introduction

Making decisions is important in life. This is because everything that human doing need a decision for a better achievement. Decision is at the most important element to success, and at the same time there are difficult moments when people feel confusing with the decision that they have to make. Ahmad Hussain Meyer (1991) states that the decision is considered good if it is effective when implemented. Making decision is a condition in selection that usually there will be a lot of different alternatives but decision makers must choose the best alternatives to get the best result. In management, managers play the important roles as the person that in charge and who is directly responsible for ensuring that work is carried out

However, many aspects of business decision making are clear and business decisions take place at each level of management in an organization although they are different characteristics at each level within organization. Decision making is an integral part of management and occurs in every function and at all levels of decision making. Information is needed to define and structure the problem, to explore and choose between the alternative solutions and to review the effects of the implemented choice.

Making a decision is the selection one from among the alternatives that available, this issue is not easy to do because before the implementation, there should be a lot of consideration and comparison to be used as a references in determine the selection process that should be taken in the management. Other than that, decision making must consider the facts that exist around for an alternative determining. In this case, the application of statistical decision theory would be required. One way to determine the result for statistic is using Bayes Theorem, as Bayes Theorem is used to calculate the probability of the causes of an event based on the effect which can be obtained as a result of observation, that in order to solve problems in making decisions that have

For the first of all, we need to know who the founder of this theorem is. Thomas Bayes who is the mathematician is the person who first lodged Bayes theorem. In his article published in 1763, Bayes introduce a version of the equation of probability which is now known as Bayes theorem. When the first paper was published, there is little expectation that simple equation can solve many problems in the theory of chance. But after a hundred years later, Bayes theorem had become an important and currently as a basis for Bayesian statistical inference. To understand the Bayes theorem, we must first understand the conditional