MODEL FORMULATION PROCESS

SYSTEM MODELING THEORY

MODEL FORMULATION

Explanation of the model formulation process: Decision, Outcome, Structure, and Data.

The model formulation process in general is one, which is the process of applying the real world everyday problems and capturing it into a model to make assessments. 

In this model, you will have the opportunity to view the process in the following areas of concern:

ü  DECISIONS

ü  OUTCOMES

ü  STRUCTURE

ü  DATA

Decisions:  The actions of applying variables, which may be controllable or uncontrollable.  This is the process of making choices towards a decision in problem solving.  It is also a course of action, which may be taken in problem solving.  It is important to note that applying uncontrollable variables is not realistic and cannot be an effective tool in the decision phase of the modeling theory.

Outcomes:  Upon making your decision, we must evaluate the measures of performance, which will become the consequences.  These are the results, which will require some sort of actions. 

Structure:  The portion of the process relates to the use of mathematics and logic, which will come in the form of a formula or equation.  If you were, an accountant firm you would benefit from this stage of the process because it can provide valuable cost and profits analysis.  It can be a way to view your inventories, FIFO, and LIFO process prior to the end of the year.

Data:  This is the raw data based on actual observations in numerical values.  You may have a money market funds whose interest may be observed based on how well stokes are doing within the past month.