3. Decisions and Investment

Incremental short-run choices and discounted long-run commitments

Time horizon changes the model:

Horizon	Central question	Typical model
Short run with existing capacity	Which future amounts differ between alternatives?	Incremental revenue, cost and opportunity cost
Long run with committed capital	Do discounted risk-adjusted cash flows create value?	NPV, scenarios and implementation review

Chapters

Short-Term Decisions: special order, make-or-buy, bottleneck and segment choices.
Capital Budgeting: investment cash flows, NPV, IRR and sensitivity.

An output from a model is not yet a recommendation. Add capacity, quality, people, strategic and reversibility constraints.

Performance Measurement

Match authority, metric and strategy without rewarding metric gaming

Short-Term Decisions

Include future differences and opportunity cost, exclude sunk allocations