decision making1 ch-09

7/28/2019 Decision Making1 Ch-09

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Decision Making

Dr. Rajnikant Patel


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WHAT IS DECISION ?


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The Nature of Managerial Decision Making

Programmed Decision Making. Solutions to routine problems determined by

rule,procedure or habits.

Non Programmed Decision Making. Specific solutions created through an

unstructured process to deal with non

routine problems.


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Types of Decisions

COMPLEXITY OF

PROBLEM

LOW HIGH

UNCERTAINTYOF

OUTCOME

HIGH JUDGMENTAL ADAPTIVE

LOW ROUTINE

ANALYTICAL

-Personal and Organizational - Chester Barnard

-Four Types of Decisions on the bases of Complexity ofProblem and Certainty of Outcome


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The Nature of Managerial decision Making.

Certainty, Risk and Uncertainty.

High Low

UncertaintyRiskCertainty

Managerial Control

The continuum of Decision Making Conditions

KNOWLEDGE


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Models of Decision Making

The Rational Model

A Four Step Process Especially Used for

Non-programmed Decisions. Weighs Different Alternatives & Choose The

Alternative With Best Chance Of Success.

The Non-Rational Model


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The Rational Model

Also Known As Economic Man Model

Behaves On Economic Rationality Of Consumer &Tries To Maximize Output.

Certain Assumptions Made Under This Model

Complete Information Regarding Problem IsAvailable

Information Of Any Time Slot Can Be Recalled

All Alternatives Are Available

Accurate Ranking To Available Alternatives IsPossible


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The Rational Model

2. Develop the

Alternatives

3.Evaluation &

Selection of

Alternative

4. Implement

& Monitor

1. Investigate the

Situation


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Searchingfor

alternatives

Implementing

decisions

Follow-upand

control

Settingmanagerialobjectives

Comparing &evaluating

alternatives

The act

of choiceTakecorrectiveaction asnecessary

Renew

search

Revise orupdate

objectives


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Stage 1: Investigate The Situation

Define Problem

Diagnose Causes

Identify Decision Objectives


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Stage 2: Develop Alternatives

Seek Creative Alternatives

Brainstorming

Nominal Groping

Do not Evaluate The Alternatives WhileGenerating Alternatives.

Temptation To Accept First Feasible Alternative Prevents Managers

From Finding Best Solution


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Stage 3: Evaluation & Selection Of

Alternatives

Evaluate Alternatives

Is This Alternative Feasible?

Is The Alternative Satisfactory Solution?

Select Best Alternative

What are the consequences for the rest of

Organization.


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Stage 4: Implement & Monitor

Plan Implementation

Implement Plan

Monitor Implementation & Make Necessary

Adjustments


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Significance & Limitations of

Rational Model

Significance

High Quality Solution

Clear Understanding Of Alternative

Selection of Best Alternative with Regards to Objectiveis Possible

Limitations of Rational Model

Uncertainty of Future

All Possible Alternative are Difficult to Determine

Difficulty in Unexploited Area

Lake of Resources Like Time, Money, Information etc.


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The Non Rational Model

In real world situation best rational Decision Making is not

always possible.

To overcome this problem non rational Model is required.

Also known as administrative man model

Satisficing Model


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Rational Model In Perspective

Three Concepts That Help In Decision

Making

Bounded Rationality

Satisfice

Heuristics

Availability

Representativeness Anchoring & Adjustment


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Non Quantitative Techniques

Brainstorming

Synetics

Nominal Grouping

Delphi Technique

Decision Tree


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Quantitative Techniques

Probability Theory

Game Theory

Queuing Theory

Linear Programming

PERT and CPM

Decision Tree


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Thanks

decision making1 ch-09

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