Whenever people decide whether the advantages or benefits of a particular action are likely to outweigh its drawbacks or costs, they engage in a form of benefit-cost analysis. In formal benefit-cost analysis, all costs of an action are compared to the anticipated or realized benefits of that action. These costs and benefits are usually expressed in money terms, taking into account the years in which they occur. Benefit-cost analyses are often linked to organizational change or another type of process improvement in order to fully-evaluate the impact of the change.
Benefit-Cost analysis can be performed a number of ways, but Operations Analytics practitioners specialize in using quantitative techniques such as monte carlo simulation to provide more realistic and reliable results.