1. Chapter Six: Decision-Making Learning Objectives
The decision-making process
Assumptions of rationality
Bounded rationality, satisficing, escalating commitment
Intuition and its role in decision-making
Types of problems and decisions (structured, programmed)
Decision-making conditions (certainty, risk, uncertainty)
Four decision-making styles
Decision-making biases and errors

2. Decisions in the Management Functions
Planning
What niche should we fill?
What strategies should we employ?
Organizing
How many employees should we hire?
How should jobs be designed?
Leading
What leadership style should I use?
What should I deal with unmotivated employees?
Controlling
How should our performance be measured?
What type of management information system should we have?

3. The Decision-Making Process
Identify a problem
Identify decision criteria
Allocate weights to the criteria
Develop alternatives
Analyze alternatives
Select an alternative
Implement the alternative
Evaluate decision effectiveness

4. The Decision-Making Process
Identification
Of a
Problem
My salespeople
need new
computers.
Identification
Of Decision
Criteria
Price
Brand Name and Model
Warranties and Support
Reliability
Repair Record
Allocation
Of Weights
To Criteria
Reliability
Brand Name and Model
Warranties and Support
Repair Record
Price 10 8 6 4 2 4

5. Decision Effectiveness
Development of
Alternatives
Fujitsu
AST
Sharp
IBM HP TI
NEC
Analysis
Selection
of an
Alternative
Implementation
of the
Evaluation of
Decision Effectiveness
Reliability
Brand Name and Model
Warranties and Support
Repair Record
Price
The Fujitsu
is the best.
Compaq 5

6. Criteria
Score
Alternatives
( )
( )
( )
( )
( )
( )
( )
( )
( )

7. Assumptions of Rationality
Problem is clear
Goal is clear
All alternatives are known
Alternatives can be ranked based on criteria
Criteria and weights are constant over time
No time or cost constraints
Maximum payoff

8. Bounded Rationality Is when you:
Construct a simplified model that extracts features of problems without capturing all their complexity
Attempt to behave rationally
Result: a “satisficing” decision (basically what you guys did)

9. Bounded Rationality Identify a problem Identify decision criteria
Allocate weights to the criteria
Develop alternatives
Analyze alternatives
Select an alternative
Implement the alternative
Evaluate decision effectiveness
Identify some criteria
Identify some alternatives
Select a “satisficing” alternative, then stop the search

10. The Role of Intuition Accumulated Judgment Previous Experience
“Gut-Level
Feeling” 16

11. Problems and Decisions
Well-structured problems
Programmed decisions
Ill-structured problems
Non-programmed decisions

12. Procedures, Rules and Policies
Procedure: Steps to solve a structured problem
Rule: Explicit statement that tells what ought/ought not do
Policy: Guide that establishes parameters for making-decisions

13. Types of Problems, Types of Decisions, and Level in the Organization
Well-Structured
Programmed
Decisions
Top
Ill-Structured
Type
Lower
Nonprogrammed 17

14. Decision-Making Conditions
Certainty
Risk
Uncertainty

15. This sort allows you to view funds by their risk levels
This sort allows you to view funds by their risk levels. The five risk levels are:
Conservative
Conservative to Moderate
Moderate
Moderate to Aggressive
Aggressive

16. Ways Managers Approach Problems
Problem avoider
Problem solver
Problem seeker

17. Dimensions of Decision-Making
Way of Thinking
Rational
Intuitive
Tolerance for Ambiguity
High
Low

18. Decision-Making Styles
Analytic
Conceptual
Behavioral
Directive
Rational
Intuitive
Way of Thinking
High
Low
Tolerance for Ambiguity

19. One Giant Leap: First Lunar Landing
What type of D-M was used? (rational or intuitive?)
Well or ill-structured problem?
Programmed or non-programmed decision?
Condition of certainty, risk, or uncertainty?