Scribd
Upload
21 views14 pages

Decision Making - 2

This document discusses decision making, including defining decisions as choices between alternatives. It describes the decision making process and different types of decisions such as programmed and non-programmed decisions. It also discusses decision making under conditions of certainty, risk, uncertainty and ambiguity. Finally, it outlines different models of how managers make decisions, including classical, administrative and political models, and discusses participative decision making.

Uploaded by

Saurabh Agarwal
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
21 views14 pages

Decision Making - 2

This document discusses decision making, including defining decisions as choices between alternatives. It describes the decision making process and different types of decisions such as programmed and non-programmed decisions. It also discusses decision making under conditions of certainty, risk, uncertainty and ambiguity. Finally, it outlines different models of how managers make decisions, including classical, administrative and political models, and discusses participative decision making.

Uploaded by

Saurabh Agarwal
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 14

Decision Making

Decisions
 A choice from available alternatives
 Process, not an isolated act
 Identify the problem
 Diagnose and analyze the causes of the problem
 Identify the alternative solutions
 Identify the criteria for selecting the best alternative
 Use the criteria to select the best alternative
 Implement the solution
 Evaluate and feedback
Types of Decisions
 Programmed Decision
 Decision made in response to a recurring problem
 Decision rules were established to solve the
problem whenever it comes up
 Problem has already been solved once – decision
is rule based.
 Order raw materials when inventory drops below a
certain point.
 When production drops below a certain level,
analyze the down-time report
Non-Programmed Decisions
 Decisions made in response to unique and
non-recurring, complex problems.
 Should we open a plant in Uganda?
 Should we introduce a new set of products?
 Should we sell off a division to a competitor?
Decision Making under Uncertainty
 What is the probability that a given alternative
will actually solve the problem?
 Decisions made based on the availability of
information and the possibility of failure
 100%=Certainty
100%=
 Less than 100% = Risk
 We don’t know the probability = Uncertainty
 If we don’t know what the problem or the
alternative solutions are, we have ambiguity.
Decision Making under Uncertainty
 I am going to launch a rocket.
 The rocket will either fly to the moon or blow
up.
 If the rocket blows up, do I know the cost?
 If the rocket doesn’t blow up, do I know the
benefits?
 What is the probability that the rocket will
blow up?
Decision Making under Uncertainty
 If I know the cost and the benefits and the
probability is100%, Certainty
 If I know the cost and the benefits but don’t
know the probability-Risk
 If I don’t know the cost or the benefits –
Uncertainty
 If I don’t know the cost or the benefits or the
probability - ambiguity
How do Managers actually make
decisions?
 Managers make decisions based on whether
they are programmed or unprogrammed and
 The degree of certainty, risk, uncertainty or
ambiguity.
 Using several models
 Classical
 Administrative
 Political
How do Managers actually make
decisions?
 Classical Model
 How a decision should be made
 Provides a guideline for reaching an
ideal solution
 Provides precise problem identification
 Allows time to gather enough
information
 Moves the decision towards certainty
 Selects from the various criteria based
on economics
How do Managers actually make
decisions?
 Administrative Model
 Manager doesn’t have time or resources
to find the ideal solution
 Identifies the minimum criteria to solve
the problem
 Selects the first solution that fits the
minimum solution
Characteristics of the
Administrative Model
 The problem is not well defined
 Research into causes etc. is minimal
 Description is simplified
 Identification of the alternatives is limited
 Looking for something that will work, not the best.
 Manager’s intuitive skills are more important
than research skills
How do Managers actually make
decisions?
 The Political Model
 Ambiguity reigns
 Everyone has their own ideas and priorities
 Information is scarce and hard to interpret
 Decision is made by coalition and consensus
 Common in political organizations
Participative Decision Making
 Advantages
 Solutions are emergent-2+2=5
 Brainstorming is a means for getting more potential solutions
 Reduces the uncertainty about solutions
 Provides broader support for the chosen solution.
 Disadvantages
 Time consuming
 Consensus may satisfy no one
 Groupthink-the absence of conflict
 Hard to find someone to punish, blame, fire when
something goes wrong.
Quality of Decision Making
 Quality of the decisions can be improved
 Everyone participates
 Conflict is encouraged
 Devil’s advocate is employed
 The leader is patient

You might also like