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Decision Making

Dr Anisur Rahman

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Decision Making

Decision makingis the cognitive process leadingto the selection of a course of action amongvariations.

Every decision making process produces a finalchoice.

Decision making is a reasoning process whichcan be rational or irrational, can be based on

explicit assumptions.

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Decision Making Tools

Allocation or Assignment umanresource planning!

E"uipment planning!

#roductivity comparison!

$nvestment!

Repair replacement %trategy

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uman Resources #lanning

Purpose: &o maintain an ade"uate and uniform supplyofsuitable experienced labour.

&o reduce overmanningduring downturns indemand

&o avoid sharp fluctuationin each trade.

Factors Influencing Demand & Supply of Labour

'ages ( Rewards )$ncentive

%kills

*ther factors such as +eographical location, working conditions,%ocial

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Allocation/Assignment Method

Assumptions:

1. No. of People (rows) = No. Tass (columns)

!. The num"ers within the matri# are the costs

associated with each particular tas.

$i# alternati%es are a%aila"le &' = &(!)(1) = .

Say you have three rushed tasks (T1), (T2) &(T3) and you have ADAMS, BROWN andCOOPER are available to perform tasks atdierent speed/ost)!

T1 T T!

"D"MS -- - /

#$%' 0 -1 --

(%%P)$ 2 -3 4

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T1T1 T2T2 T3T3ADAMSADAMS #11 #1$ #%

BROWNBROWN # #1' #11

COOPERCOOPER # #12 #

T1T1 T2T2 T3T3

ADAMSADAMS #* # #'

BROWNBROWN #' #2 #3

COOPERCOOPER #2 #* #'

%tep -5 Row operation select the lowest cost element in each row andsubtract this element from all elements in that row to develop a new matrix

%tep 35 6olumn operation select the lowest cost element in each row inthe new matrix and subtract this element from all elements in that row todevelop a new matrix

T1T1 T2T2 T3T3

ADAMSADAMS #* #% #'

BROWNBROWN #' #' #3

COOPERCOOPER #2 #3 #'

6heck each row andcolumn has at leastone 718! if not go step 3

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%tep 95 %trike off all the columns and rows that contain at least one :ero

with minimum number of hori:ontal and vertical lines T1T1 T2T2 T3T3

ADAMSADAMS #* #% #'

BROWNBROWN #' #' #3

COOPERCOOPER #2 #3 #'

%tep 5 6heck5 ; of lines < ; of =obs, if not means optimisation has not yetarrived. $n that case select the minimum uncovered element and subtractthis min element from all the uncovered elements to get a new matrixAnd strike off all the rows and columns again with minimum numbers ofhori:ontal and vertical lines

T1T1 T2T2 T3T3ADAMSADAMS #3 #$ #'

BROWNBROWN #' #' #3

COOPERCOOPER #' #1 #'

%tep 5 6heck ;>ines < ;=obs, if yes optimal solution arrived

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T1T1

T2T2

T3T3

ADAMSADAMS #3 #$ #'

BROWNBROWN #' #' #3

COOPERCOOPER #' #1 #'

%tep ?5 %elect the row@column with minumum ; of :ero, assign the row #erson tothe column obs corresponding to the :ero and strike off that column and row

%tep ?5 Do the same things for remaining rows and columns and assign the

corresponding #ersons to obs

T1T1 T2T2 T3T3

ADAMSADAMS

BROWNBROWN #' #'

COOPERCOOPER #' #1

Assign ob&9 to Adam

Assign ob&- to 6ooper

T1T1 T2T2 T3T3

ADAMSADAMS

BROWNBROWN #'

COOPERCOOPER

Assign ob&3 to Brown

&otal cost < /C-1C2 < 3?

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&he assignment is made as follows5-. %elect the row or column with fewest number of

:eroes in it

3. %elect an element in that row@column that is :ero

9. Assign the person in that row to that =ob in thecolumn

. Delete assigned row and column

?. Repeat the preceding procedure.

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ou can ha%e an optimal solution "* Maximising efficiency

Example:

The onl* difference is that *ou need to con%ert the matri# firstinto a minimising opportunit* costta"le and then proceed with

the pre%ious four steps as "efore.

&- &3 &9 &

ADA% 31 /1 ?1 ??

BR*' /1 91 01 4?

6**#ER 01 -11 21 01

DAF$% /? 01 4? 41

Efficiency

&- &3 &9 &

ADA% 01 1 ?1 ?BR*' 1 41 31 3?

6**#ER 31 1 -1 31

DAF$% 9? 31 3? 91

*pportunity 6ost

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T1 T! T& T+

A,AM$ +- - 1- 5

0N !- 2- - 2

300P4 !- - 1- !-

,A56$15 - 2 1-

T1 T! T& T+

A,AM$ !2 - 1- -0N 2 2- - -

300P4 2 - 1- 12

,A56$ 0 - 2 2

+ $traight lines co%ering all 7eros in the matri# 0ptimal $olution:

3ooper will definitel* perform Tas T! (1--8)

,a%is will perform Tas T1 (28)

rown Tas & (9-8) finall* Adams will perform Tas + (228)

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atrix Reduction Guestion

our compan* has one surplus truc in each of the towns A; ; 3;

,; and 4 and one deficit truc in each of the construction sites 1; !;

&; +; 2 and . The distance "etween the towns and the construction

sites in ilometres is shown in the matri# "elow (see Ta"le 1).

Assign the trucs from towns to construction sites to minimise the

total distance co%ered.

Site 1 Site Site ! Site * Site + Site ,

" -3 -1 -? 33 -0 0

# -1 -0 3? -? -/ -3

( -- -1 9 0 ? 2

D / - -1 -9 -9 -3

) 0 -3 -- 4 -9 -1

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4

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*wnership 6ost*wnership 6ost

'($')

1(31)

2(2')

3(11)

1(2) #12

2 (1) #22 #13

3 (1') #3' #21 #1'

$ ($) #3% #2 #1% #

Age at #urchase'

($')1

(31)2

(2')3

(11)

1(2) 3

2 (1) $

3 (1') 13 1' %

$ ($) 22 1 1*

Age at #urchase

aintenanceaintenance

6ost6ost

JearlyJearly

&otal 6ost&otal 6ost

'($')

1(31)

2(2')

3(11)

1(2) 1*

2 (1) 1$!* 1

3 (1') 1$!31$!3 1*!* 1%

$ ($) 1$!* 1*!3 1*!* 1%

Age at #urchase

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3omparing Producti%it*

Two e

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Equipment A

6t re

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Equipment #

6t re2;---

Profit = 2-;---

ou need to in%est !+-;--- to get 2-;--- per *ear for 1+.2 *ears

P = 2----#1+.2/!+---- = &.-!

Therefore; # is t$e best proposition.

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If you could some-o. determine precisely .-at .ould -appen as a result of

c-oosing eac- option in a decision/ making business decisions .ould be easy0 oucould simply calculate t-e 2alue of eac- competing option and select t-e one .it-t-e -ig-est 2alue0

In t-e real .orld/ decisions are not 3uite t-is simple0 4o.e2er/ t-e process ofdecision5making stillre3uires c-oosing t-e most 2aluable option55most 2aluablebeing/ in t-is case/ t-e option t-at -as t-e -ig-estExpected Monetary Value6)M78/a measure of probabilistic 2alue0

Suppose you are gi2en t-e opportunity to play a simple game0 " friend flips a coin0If it comes up -eads/ you .in 910 If it comes up tails/ you .in not-ing0 -at is t-e2alue of t-is game to you; Stated anot-er .ay/ -o. muc- .ould you pay to playt-is game;

)ac- time you play t-e game you -a2e a +< c-ance of .inning 91 and a +