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 RationalIntuitive Analytical Conceptual Directive Behavioral Tolerance to Ambiguity

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