Decision Making

Decision making is the study of

identifying and choosing alternatives
based on the values and preferences
of the decision maker.
Choosing from Alternatives
DECISION MAKING
DM is conscious and a human process
,involving both individual and social
phenomenon based upon factual and
value premises ,which concludes
with a choice of one behavioral
activity from the alternatives with a
intention of moving towards some
desired state of affairs.
CHARACTERISTIC OF DECISION

It is the choice of the best alternative

It is end process preceded by
Deliberations and Reasoning

It relates the means to ends
TYPES OF MANAGERIAL DECISIONS

Personal and Organizational Decisions

Basic &Routine Decisions

Strategic and tactical decisions

Programmed & Non Programmed
Decisions
TYPES OF MANAGERIAL DECISIONS

Personal and Organizational Decisions

Personal Decisions:
cannot ordinarily delegated to
others
Attempt to achieve personal goals

Organizational Decisions:
Can often if not always be delegated
Attempt to achieve organizational goals



TYPES OF MANAGERIAL DECISIONS
Basic &Routine Decisions

Basic Decisions:
Unique one time decisions involving
long range of Commitments of relative
performance or duration or those
involving large investment
Plant Location, Organization structure,
Wage Negotiation


TYPES OF MANAGERIAL DECISIONS
Routine Decisions:

Everyday ,Highly Repetitive

Management Decisions which by themselves
have little impact on the overall organization

Production Supervisors decision to appoint a
new worker
Programmed & Non Programmed Decisions


Programmed Decisions:
Routine ,Repetitiveness
Straight forward ,familiar and easily defined
problems

Non programmed Decisions:
Unique, one shot

Strategic and Tactical or
operational
Strategic decision:-could not be delegated
below the management level.
Strategic decision is major choice of
actions concerning allocation of resources
and contribution to the achievement of
organisational objective
Tactical:-relates day to day working of the
organization.
Specific objectives

Evaluation of
alternatives
Identification of
problems
Search of alternatives
Results Action Choice of alternatives

Feed back
Decision making process
Purchase of new computer
Reliability . 10
Screen size .. 8
Warranties 7
Weight 6
Price 4
Screen type.. 3
Apple
HP
Compaq
Acer
Lenovo
HCL
Sony

Selection of the best
Apple
HP
Compaq
Acer
Lenovo
HCL
Sony
Price
Weight
Warranties
Screen type
Reliability
Screen size
Decision Making Models
The Classical Model
The Administrative Model
The Political Model
Classical Model
Based upon economic assumptions
Four assumptions underlying this model
1. The decision maker operates to
accomplish goals that are Known and
agreed upon. problems are precisely
formulated and defined.
2. The decision maker strives for conditions
of certainty , gathering complete
information .all alternatives and potential
results are calculated.
Cont.
3.Criteria for evaluating alternatives are
known. the decision maker selects the
alternative that will maximize the
economic return to the organization.
4.The decision maker is rational and uses
logic to assign values, order
preferences,evalute alternatives and make
the decision that will maximize the
attainment of organization goals.
Administrative Model
Describes actually how managers makes
decisions in difficult situations.
Based upon Bounded Rationality and
Satisficing.
Bounded rationality:-means people have
limits or boundaries.
Satisficing:-decision makers choose the
first solution alternative that satisfies
minimal decision criteria.

Political Model
Useful for making nonprogrammed
decisions when conditions are uncertain,
information is limited and mangers may
disagree about goals to pursue or what
course of action to take.
Mangers forms Coalition among
themselves.
Decision Tree
A decision is a decision support tool that
uses a tree like graph or model of decisions
and their possible consequences ,including
chance event outcomes, resource costs, and
utility.
Specifically used in operations research
decision analysis to help and identify a
strategy most likely to reach a goal.