Decision Making

Decision making can be regarded as an outcome of mental processes leading to the selection of a course of action among several alternatives. Every decision making process produces a final output. The output can be an action or an opinion of choice.

Characteristics of Decision Making

Goal-oriented process

Selection process

Continuous Process

Responsibility of managers

Art as well as science

Some of the decision making techniques

Listing the advantages and disadvantages of each option.

Flipping a coin, cutting a deck of playing cards, and other random or coincidence methods.

Accepting the first option that seems like it might achieve the desired result

Acquiesce to a person in authority or an "expert"

Process

Step 1: Define the problem Step 2: Identify alternatives Step 3: Evaluate the alternatives Step 4: Make the decision Step 5: Implement the decision Step 6: Evaluate the decision

Limited, or "Bounded," Rationality

Limitations of information, time, and certainty limit rationality, even though a manager tries earnestly to be completely rational

Satisficing is picking a course of action that is satisfactory or good enough under the circumstances

Development of Alternatives and the Limiting Factor

A limiting factor is something that stands in the way of accomplishing a desired objective

The principle of the limiting factor: By recognizing and overcoming those factors that stand critically in the way of a goal, the best alternative course of action can be selected

Quantitative and Qualitative Factors

Quantitative factors are factors that can be measured in numerical terms

Qualitative, or intangible, factors are those that are difficult to measure numerically .

Selecting an Alternative: Three Approaches

When selecting from among alternatives, managers can use:

1. Experience, 2. Experimentation, and 3. Research and analysis

Types of Decisions

Structured Problem- Straightforward, familiar and

easily defined problem.

Programmed Decisions- A repetitive decision that

can be handled by a routine approach.

Unstructured Problem- Problems that are new or

Unusual and for which information is incomplete.

Non-Programmed Decision- A unique decision that

requires a custom made solution.

Unstructured Top

Well-Structured Lower

Programmed Decisions Non-Programmed decisions

Decision making Conditions

Certainty- A situation in which a manager can

make accurate decisions because all

outcomes are known.

Risk- A situation in which the decision maker

is able to estimate the likely hood of certain

outcomes.

Uncertainty- A situation in which the decision

maker has neither certainty nor reasonable

probability estimates available.

Decision making Styles

High

Low Way of thinking

Rational Intuitive

Analytical Conceptual

Directive Behavioral

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Directive style- Takes fast decisions and focus on short runs.

Take speedy decision often resulting in using minimal information

and accessing few alternatives.

Analytical Style- Careful decision takers which use more

information and considers more alternatives than Above.

Conceptual Style- Look for many alternatives. Focus on long

run and good at solving creative problems.

Behavioral Style- Work well with others and Receptive to

suggestions from others.

Simmons decision-making model

Four phases Intelligence phase-

Initially the problem comes and we are in the intelligence phase thinking of the problem as it comes and then we try to find out what the solution to the given problem

Design phase the way and method to solve the problem is thought and we actually try to analyze the problem,

we try to find the way that can actually solve the problem.

Choice phase we try to find the best alternative from the given set of alternatives.

Implementation phase we implement the solution to the given problem