Purpose -The purpose of this paper is to explore the system requirements model. According to the concept of loss costs of Type I and Type II errors, it can define the optimal decision line, and reduce overall loss costs. Moreover, it can decrease the probability of Type I and Type II error by the systems thinking, and it can effectively reduce overall loss costs. Design/methodology/approach -The paper proposed a system demand model and constructed a decision-making system thinking model as well as a decision-making performance management model using the principle of system demand. Types of decision-making errors were analyzed to set judgments on the error risk and establish a model of improvement evaluation key factors, in order to reduce decision-making error risk and enhance decision quality. It also constructed the improved decision-making to assess the key factors, to reduce the risk of making errors in order to improve the quality of decision-making. Findings -Optimistic decision-makers (risk takers) tend to make Type II errors, whereas pessimistic decision makers (conservatives) tend to make Type I errors. Financial depressions are the time for optimistic decision makers (risk takers) and boom periods are the time for pessimistic decision makers (conservatives). Originality/value -The concept of the loss cost of two decision-making errors and related cost function models were proposed. Decision makers could make decisions with a more stable model, taking into consideration false alarms and the cost function of errors in order to determine the position of the decision-making line. It could effectively reduce decision-making error costs and increase the precision of decision-making.