Variable Analysis
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Expectations
Justification
If people actually received $100 on average for each time they spun the wheel, there probably would be a long line of people excited to play the odds. Similarly, the carnival could expect to lose a great deal of money by offering the game. Using the concept of chance (an unknown or unpredictable element) instead of estimating the outcome as a basis for a benefit–cost analysis determines the causes of risk and how to improve them.
If an outcome does not benefit a company, decision makers can justify their choices by saying their forecasts were correct, but conditions changed for the worse. Providing analytical data to decision makers notifies them of the level of risk involved in potential decisions.
