Why might a business choose the arbitrary allocation method?

The arbitrary allocation method is often chosen by businesses primarily due to a lack of reliable data. This approach allows organizations to distribute resources or costs without the backing of comprehensive analytical data, making it a practical choice when precise information is either incomplete or unavailable. In situations where companies do not have access to detailed performance metrics or market research, they may resort to arbitrary allocation as a means of making decisions that still drive business operations, even though the decisions may not be based on a thorough analysis.

By using this method, businesses can quickly assign resources, allowing them to act in a timely manner despite uncertainties. Consequently, when companies encounter challenges in obtaining reliable data or experience inconsistencies in their data collection processes, they often fall back on arbitrary methods to ensure decisions are made and operations continue. This approach emphasizes practicality over analytical rigor, reflecting a common response in dynamic business environments where time-sensitive decisions are essential.