Stochastic models in decision-making

Stochastic models in decision-making are tools that incorporate randomness and uncertainty to predict possible outcomes and inform choices. Unlike deterministic models, which assume fixed results, stochastic models recognize that many variables are unpredictable and can vary in different situations. They use probability to represent these uncertainties, helping decision-makers evaluate risks and benefits in complex environments such as finance, supply chain, or healthcare. By analyzing possible scenarios and their likelihoods, stochastic models support more informed, flexible decisions in uncertain conditions.