DECISION MAKING The word ‘decision’ has been derived from the Latin word ‘decidere’ which means acutting sway ‘or 4 cutting off, or in a practical sense. Thus a decision involves a cut off alternatives between those that are desirable and those that are not desirable. The decision is a kind of choice of a desirable alternatives. Decisions form an integral part of any organization and management. Decision making is the process of making choices among various courses of actions. It involves using the correct and complete information while making a decision. In every organization, the officer has to make several decisions to sustain the Organization's effective functioning. Ithelps on achieving the goals and objectives of an organization. A bold and logical decision leads to the proper utilization of the company’s resources and thus, helps in its growth. A DECISION is a choice from among the available alternatives. in simple terms, decision making is the process of making choices by recognizing the problem, gathering information about feasible solutions, and finalizing the best alternative.From top-level executives who make strategic decisions to front-line employees whe make ‘operational decisions, each individual plays a crucial role in driving the success of the business through their decision-making abilities, ne aes normal problems with certainty regarding cause and effect relationships. Novel, unknown criteria have not seen encountered before. Decision making is a skill that comes with training and experience, Here are some characteristics of Decision making. Rational thinking: Rational thinking involves fixing goals and objectives, systematically analyzing options, and choosing the right path using logic and evidence. However, this also involves considering emotions apart from only logic. Process: Every efficient task needs a robust process to make It consistently successful. Decision-making is also familiar with this fact. it also must have 3 process that starts at = stage, has specific steps, and has an end. And this process must consider conscious, unconscious, and emotional factors, Selective: You must ensure that each selection has clear evidence of a positive impact on the organization, Positive: While making a management decision, you aim for positive outcomes. This characteristic differs from a scientific decision; you don't need a positive result, However, any negative impact due to management decisions will cost the company capital and reputation. (Commitment: Commitment is necessary for any success; however, officers need to have a strong commitment because of the number of opposition they will face and the ponsibility they shoulder. To successfully make management decisions, you need to commit ta defending them and seeing through them. Evaluation: decision-making involves lots of evaluation; you must see all the angles. In addition, you must have several backup plans when your first one fails, requiring meticulous evidence evaluation while making a decision. ‘An Officer may have to make decisions at some point to get their organizational goals done, These decisions are categorized further. ‘The types of decision making in an organization are as follows: 1. Programmed and Non-Programmed Decisions: Programmed decisions are routine and repetitive in nature. These decisions deal with common and frequently occurring problems in an organization such as buying behaviour of consumers, sanctioning of different types of leave to employees, purchasing decisions, salary increment, etc, Solution by Management Science, computations and nules.Now-programmed dreisions are not routine or common in nature ‘These are related to etceptional Situations in which guidelines or routine management is nol sct. For example, problems arising from a decline in market share, increasing competition in the business environment. The majarity of the decisions taken by managers do fall in this non programmed category, Here the manger deals with knowledge intuition or judgment. This involves strategic planning. 2, Operational/Tactical and Strategic Decisions: Operational/tactical decisions are just the normal functioning of the organization. These decisions do not require much time and take a shorier time as compared io other decisions taken. Ample of responsibilities are delegated to subordinates. The main decision is to create harmony int an Organization and to see whether the management is proper or not. Day to day decisions are mostly programmed onc, Strategic decisions involves long term wnplications. It is a major choice of actions conceming allocation of resources and contribution to the achievement of organizational objectives. Usually, strategic decisions. are taken by top-level hierarchy. 3, Organizational and Personal Decisions: If the decision is taken collectively keeping in mind the organizational goal, it is known as the organization goal, and if the officer takes any decision in the personal capacity (affecting his/her life). It is known as personal decisions. These decisions may sometimes affect the functioning of the organization as well. For example, if the employee has decided to leave the organization, it may affect the organization. The authority of taking personal decisions cannot be delegated and is dependent on the individual itself, 4. Major and Minor Decisions: These are classified as the type of decision-making where decision-related to purchase of new premises is a major decision. These are taken by top management whereas the purchase of stationary is a minor decision, Minor decisions can be taken by the superintendent. §, Individual and Group Decisions: When the decision is taken by an individual, it is categorized as an individual decision. Usually, routine decisions are taken by individuals within the policy framework of the organization. Group decisions are taken by a group of individuals in the form of a standing commatice. Generally, important types of decisions in management are shifted to this committee. The main aim ofa group decision is to involve the maximum number of individuals in the process of decision making. ‘Decision making Is the process of making choices by kéentifying 8 decision. gathering information. and assessing altemative resolutions. Using a step-by-step decision-making process can helpyou make more deliberate, thoughtful decisions by organizing relevant information and defining Decision-making is the process of selecting the best courne of action from o set of alternative options to achieve a desired goal or objective. it involves four interrelated phases: explorative (searching for potential altematives), speculative (identifying the factors: that influence the decision problem), evaluative {analyzing and comparing the altemative courses of action), and selective (making the final choice af the best course of action). The ultimate aim of decision-making is to find tho option that is beliaved to fulfil the abjective of the decision problem most satisfactorily compared to other allematives. 6 Steps of Decision-making Process. Decision-making is a systematic process that comprises the following elements; 1. Specific Objective: The need for decision-making arises in order to achieve certain Specific objective, Every action of a human being is goal oriented. The starting point of any analysis of decision making involves the determination of whether a decision needs to be made. 2. Problem Identification: Identification of problem is the real beginning of decision- making process. A problem is a felt need, a question thrown forward for a solution, this a gap between present and desired state of affairs on the subject matter of decision. A problem can be identified much clearly if the officers go through diagnosis and analysis of the problem. ‘a. Diagnosis: The term ‘diagnosis’ has come from Medical Science where it is used as the process of kdentifying a disease from its signs and symptoms. Symptoms occupy an essential place in the problem-salving process for they signal the existence of problem and guide the search for the undertying problem. For example, if an organisation has high tumover of its employees, it indicates that something is wrong with the organisation. The symptom of high tumover may provide the clue to the real problem and managers can ‘overcome the problem by taking appropriate action (decision making involves in taking action). Often an officer to diagnose the problem correctly and sometimes they treat symptom as problem. Therefore, they should do this exercise very carefully Diagnosing the real problem implies knowing the gap between what is and what ought to be, identifying the reasons for the gap, and understanding the problem in relation to higher objectives of the organization. : b. Analysis: While the diagnosis of problem gives the understanding of what should be done in terms of decision making, analysis of problem takes # 9 stap further the analysis of the problem requires to find out who would make decision, what information would be needed, and from where the information és available This analysis may provide officer with revealing j Greumstances thal help them Lo gain an lxsight into the problem, The whole approach of analysis of problem sRauld, howayar, be based around critical factors. Thus, diagnosis and ‘analysis of problem requiring decision will clarify what is needed and where the allematives for doing the thing can be sought3. Search for Alternatives: A thorough diagnosis defines both @ specific problem and ‘the situation in which the problem exists. With this definition in mind, a decision maker seeks possible solutions. A problem can be solved in several ways, however, all the ‘ways cannot be equally satisfying Further If there is only one way of salving a problem, No question of decision arises, Therefore, the decision maker must try to find out the various altematives available in order to get the most satisfactory result of a decision. Identification of various alternatives not only serves the purpose of selecting the most satisfactory one. However, it should bore in mind that it may not be possible to consider all altematives either because some / of the allematives cannot be considered for selection because of obvious limitations of the free decision maker or information about all alternatives may not be available. Therefore, while generating alternatives, the concept of limiting factor should be applied. A limiting factor is one which stands in the way of accomplishing a desired objective. If these factors are identified, managers will confine their search for alternatives to those which will ‘overcome the limiting factors. For example, if an organisation has limitation in raising ‘sizable finances, It cannot consider projects involving high investment A decision maker can use several sources for identifying alternatives: his own past Experience practices followed by others, and using creative techniques, Copying from the experience of others is another way of generating altematives. Thus, alematives uted by successful decision makers can be thought of as alternatives of decision making. This is also practised by many organisations after making suitable amendments in the light of changed decision context. Importing of technology from foreign countries with suitable changes is good example of this type of alternatives. 5. Evaluation of Alternatives: Aftor the various alternatives are identified, the next step is to evaluate them and select the one thal will meet the choice criteria. However, all allermatives available for decision making will not be taken for detailed evaluation because of the obvious limitations of managers in evaluating all allernatives. The energy of managers is limited and psychologically most of them prefer to work on plans that have good prospect of being carried out. lin narrowing down the number of alternatives, two approaches can be followed Constraint on altematives and of allematives of similar nature. The decision maker develops a list of limits that must be mot by a satisfactory solution. He may treat these limitation as constraints, that ts, he may check proposed alkematives against limits, and if an allemative does nol meat them, he can discard it. In the second approach, various alternatives can be grouped into classes on some specific criteria important to decision making. A representative alternative from one group may be selected for future analyses. 6. Choice of Alternative: The evaluation of various alternatives presents a clear picture as lo how each one of them contributes to the objectives under madera ie tay ozs strains ateratrs on haa RS. Choice aspect of decision making {5 related to deciding the most which fits with the organisational objectives. It may be seen that the chosen altemative should be acceptable in the light of the ceganisalional objectives, the decision maker can go through three approaches: oxperience experimentation, and research and analysis a. Experience. A decision maker can choose an allemative based on their past experience if they have solved similar problems earlier. A decision maker rely more on expenence than afternative methods of choice. Past experience has some benefits but it has certain limitation that Il blocks:Fanitig ect choice apaciaily when the envionmental factors are mory b. Experimentation, Experimentation which is generally used in scientific ‘enquiry involves that a particular alternative is put in practice, resull |s ‘observed and the alternative giving the best result ip solocted, = ¢. Research and Analysis. Research and analysis is the most certain method of selecting an altemative, specially when major decisions are involved. This approach entaits solving @ problem first by comprehending it, This involves a search for relationships between the more critical variables, constraints, and planning premises that bear the objectives sought. In the ‘second stage, the altemative is broken into various components. Their individual impact on objective is evaluated and the impact of all factors of an alternative is combined to find out the lotal impact of the particular alternative. The one having the most positive Impact is chosen. Since this requires making a lot of calculations. often the help of computer is taken. Though various approaches are available for choosing an alternative, the decision maker's personal values and aspirations affect what allemative will be chosen. In fact, in one way, the decision making is the transiation of one's values and aspirations into: action Thus, the rational process of decision making is considerably affected by the personal factors. Further, a decision maker should take inlo account the uncertainty of ‘outcome of a decision. Therefore. they should be ready with alternative action if one fails in order to do this. 7. Action (Once the alternative is selected, it is put into action. Truly speaking, the actual process of decision making ends with the choice of an alternative through which the objectives can be achieved. However, decision making, being a continuous and ongoing process, must ensure that the objectives have been achieved by the chasen allemative. Uniess this 5s done. A decision maker will never know what way their choice has contributed. Tharatore, the Implementation of decision may be seen as an integral aspect of decision. ‘Once the creative and analytical espects of decision making through which an alternative somathing operationally effective ‘This ts the action aspect of decision making ‘The basic seterence between decision making as an analytical process and action is that tha former requires the use of conceptual ‘kills since it translates the abstract ideas into reality. Implementation of a decision raquires the communication to subordinatos, getting of subordinates over the matters involved in the decision, and getting their way to make the action more effective. The aflectiveness of action is oan ieoee itis only effective action through which organisational objectives can be achieved, and right decisions help in effective action 7. Results When is wut into action, It brings certain resulls, These results must Fae ved with adjectives, the starting point of decision-making process, if good decision fas been made and implemented proparly. Thus, results provide indication whee . decision maning aad fs implementation is proper. Therefore, manugars Aes up follow-up action in of feedback received results. deviation toliow up actin i and wus, this should be analysed apd tactors responsible fr hss, 7 aoe atouid be located. The feedback may also help in reviewing the decisionrequire successful manager is one who keeps a close look at the objectives and results of the decision and ‘modifies his decision according to the changes in the circumstances.Following is the analysis of situation pares ae for individual and group decisions, 2, Time availability 3. Quality of decision 4. Climate of Decision making 3. Legal requirem 1. Broinstorming: it is a technique to stimulate iden generation for decision making, ‘Originally applied by Osbom in 1938 in an American Company, the technique is now widely used by many companies and other organizations for building dems. [tis most sulted ‘to sitnple and well defined problems, For Brainstorming a group of 10 to 15 employees or people is constituted. Though brainstorming can result in many shallow and uscless ideas, it can spur members to offer new ideas as well 2. Nominal Group Think/Technique: NGT this technique is developed by Andre Delbecg and Andrew Van de Ven at the University of Wisconsin, A structured group meeting which festricts verbal communication among members during decision making process, It is meant to resolve differences in group opinion by having individuals generate and then rank aseries of ideas in the problem exploration, alternative genention er choice making states of group decision making, No criticixm lowed. The NOT is widely used in health services, industry, education and government organizations. 3. Delphi technique: the name Delphi indicates a shrine af which the ancient Greeks used to pray for information about the firture. This idea is developed by Norman Dalkey and Olai Helmer. In Delphi technique members do not have face to face interaction, The decinien ts arrived at through written communication in the form of filling up questionnaire offen through email. Used for forecasting future events. 1$ to 20 experts are involved. A summary is prepared by taking the opinions of the experts, 4, Consensus Mapping: tries to pool the ideas generated by several task subgroups to arrive at adecixion, The techn ique begins after a task group has developed, clarified and evaluated a list of ideas, The facilitator encourages participants to search for clusters and categories of ideas. §, Fish Howling: All the members are seated in a circle form. ‘One person sits in the centre chair and gives his suggestion to the problem, Members can ask questions to that person. No two members are allowed to talk to each other than with the person in the center.A. Quantitative Techniques B. Non Quantitative Techniques Non Quantitative Techniques Intuition Facts Experience Considered Opinions Quantitative TechniquesQneration Research: itincludes OR models- the logical physical presentatio Of prablem. The models may be simple ar Sirplen caRcAa thine type a vaten este aaa application af specific methods, tools; and techniques to Operations m @ optimum solution to the problems, P: | and Assignments are solved by Operation Retant, SE eS eee ! Decision Tree: A decision tree is a diagrammatic rapresentation of a problem and on it we show all possible courses of action hat we can take in @ particular situation and all possible outcomes for each possible courne of action, Decision trees are useful tools, particularly for situations whore financial data and probability of oulcomes are relatively reliable, They are used to compare the costs and likely values of decision pathways that ® business might take, They often include decision alternatives thal to multiple possible outcomes, with the likelihood of each outcome being measured numerically. A decision tree is a branched flowchart showing multiple pathways for potential decisions and outcomes, The tree starts with what is called a decisian node, which signifies that a decision must be made. A decision maker must study all the alternatives vory carefully and select the best alternative. Starts with Yea/No. Linear Programming: Linear programming is a mathematical technique that determines the best way to use available resources, A decision maker use the process to help make decisions about the most efficient use of limited resources — like money, time, materials, and machinery, To get the best allocation of its limited resources viz money, materials, machines, Used in Agriculture, contract biding, evaluation of tenders, ‘Game Theory: is quite helpful in making decisions under competitive situations, A game is a situation involving at least two people. It is used for deciding about competitive pricing. Decision making is influenced by the acta of competitors, The game theory attempts to provide an answer to the question: what may be considered to be rational ‘course of action. It is the logic of rational decisions, It was basically developed for use In wars 80 that actions of the army can be decided in the light of actions taken by opposite army, itis a science of conflict, if in a Involves the mathematical study of queues or wailing lines. This theory helps to find out the optimum number and cost of service facilities required. This helps in reducing the waiting time. A group of items waiting to receive the service is known as queues. The formation of waiting lines is a common phenomenon, It may happen al the aitine reservation, college admissions, service station, booking ‘window, retail stare atc.OBJECTIVE QUESTIONS 1 Which one of the following is not a programmed decision. (A) Promotion decision (B) Demotion decision (C) Launching a new product (OD) Setting sales quota Ans.c. Launching a new product 2. Which one of the following is relovant for problem identification in decision making? (A) Research and analysis (B) Diagnosis (C) Experience (D) Experimentation Ans.B, Diagnosis 3. When one of the following is important in effective decision making? A. Hard decision B. Application of limiting factor GC, Pleasing decision D. Implied decision Ans.8. Application of limiting factor 4. Which one of the following is a quantitative technique of decision making?(A) Brainstorming (8) Delphi technique (C) Decision tree (D) Consensus mapping Ans. C. Decision tree Q5.Which one of the following is a technique for improving group decision making. 8. Brainstorming b. Decision tree ¢, Game theory d. Queuing theory Ans.a, Brainstorming