Decision Making

Lemos, Justin
Miguel, Noruel Jan
Capote, Jerick Jay
Quiones, Khen

DECISION MAKING
manager of all kinds and types,
including the engineering manager
are primarily tasks to provide
leadership in the quest for attainment
of the organizations objective.

Decision making as a management responsibility

decision must be made at various level in the
work place they are also made at the various
stages in the management process.
What is decision making?
Decision making may be defined as the process
of identifying and choosing alternative courses
od action in a manner appropriate to the demand
od the situation.

The decision making process

Diagnose the problem
Analyze environment
Articulate problem or opportunity
Develop viable alternatives
Evaluate alternatives
Make a choice
Implement decision
Evaluate and Adapt decision result

Diagnose Problem
If a manager wants to make an intelligent
decision, his first move mist be to identify
the problem. If the manager fails in the
aspect, it is almost impossible to succeed in
the subsequent steps.

Analyze the environment

The environment where the organization is situated plays very
significant role in the success or failure of such an organizational.
Example of Internal Limitation
1.) Limited funds available for the purchase of equipment
2.) Limited training in the part of employees
3.) III designed facilities
Example of External Limitation
1.) Patent are controlled by other organization
2.) A very limited market for the companys products and service
exist
3.) Strict enforcement of local zoning regulation.

Component of the environment consist of two

major concern Internal & External
Internal The internal environment
refers to organizational activities with a
firm that surrounds decision making.
External The external environment
refers to variable that are outside the
organization and not typically within the
short run control of top management.

Develop
Viable
Alternatives

Develop Viable Alternatives

The best among the alternative
solutions.

Procedures
1. Prepare a list of alternative solutions.
2. Determine the viability of each solutions.
3. Revise the list by striking out those which
are not viable.

Example:
An engineering firm has a problem of
increasing its output by 30%. This is the
result of a new agreement between the firm
and one of its clients.

The Internal Environment

Organizational
aspects
Marketing Aspects
Personnel Aspects
Production
Aspects
Financial Aspects

External
Environment

Decision

External
Environment

The External Environment

Government

Labor
Unions

Banks

Suppliers

ENGINEERING
FIRM

Competitors

Public

Engineers

Clients

Alternative Courses of Action:

1. Improve the capacity of the firm by
hiring more workers and building
additional facilities;
2. Secure the services of
subcontractors;
3. Buy the needed additional output from
another firm;
4. Stop serving some of the companys
customers; and
5. Delay servicing some clients.

Evaluate
Alternatives

Evaluate Alternatives
each alternative must be analyzed
and evaluated in terms of its value,
cost, and risk characteristics. -Souder

Example:
An engineer manager is faced with a
problem of choosing between three
applicants to fill up a lone vacancy for a
junior engineer. He will have to set up
certain criteria for evaluating the applicants.

Evaluation Sheet
Title of Vacant position: JUNIOR ENGINEER
Date of Evaluation: December 28, 1996
Educ- Trai- Expe- Age Total
Applicant
ation ning rience
Point
s
1. Jose Sibayan, Jr.
2. Menandro Rillon
3. Dante dela Cruz

40
40
40

35
36
38

4
5
6

10
9
7

89
90
91

Making a choice

Choice

making

Refers to the process of selecting among

representatives representing potential solution to the
problem.
To make the selection process easier the alternatives
can be ranked from best to worst on the basis of some
factors like benefit, cost, or risk.

Implement

decisions

Refers to carrying out the decision so

that objective sought will be
achieved.
To make an implementation
effective, a plan must be devised.

Evaluate

and adapt decision results

Feedback
The process which requires checking at each stage
of the process.

Control
Refers to the action made to ensure that activities
performed match the desired activity or goal.

Approaches

in solving problem

Qualitative evaluation
Quantitative evaluation

Qualitative

evaluation

Evaluation of alternatives using

intuition and subjective
judgment.
The problem is fairly simple.
The problem is familiar.
The cost involved are not great.
Immediate decisions are needed.

Quantitative

evaluation

Refers to the evaluation of

alternatives using any technique in a
group classified as rational or
analytical.

Quantitative

models for decision

making

Inventory models
Queuing theory
Network models
Forecasting
Regression analysis
Simulation
Linear programming
Sampling theory
Statistical decision theory

Inventory

models

Economic order quantity model

Production order quantity model
Back order inventory model
Quantity discount model

Queuing Theory

Network Models
The two most prominent network models
are:
1. Program Revaluation Review Technique
(PERT)-which enables engineer managers to
schedule, monitor, and control large and
complex projects by employing three time
estimates for each activity.
2. Critical Path Method (CPM)- using only
one time factor per activity that enables the
engineer managers to schedule, control, and
control large and complex projects

Forecasting
- defined as the collection of past and
current information to make
predictions about the future.

Regression Analysis
Is a forecasting method that examines
the association between two or more
variables.
It uses a data from previous periods to
predict future events.
Simple Regression- one independent
variable involved
Multiple Regression- two or more
independent involved

Simulation
Constructed to represent, reality, on which
conclusion about real-life problems can be
used.
It is highly sophisticated tool by means of
which the decisions maker develops a
mathematical model of the system under
construction.
Does not guarantee an optimum solution,
but it can evaluate the alternative fed into
the process by the decision-maker.

Linear Programming
Is a quantitative technique that is
used to produce an optimum solution
within the bounds imposed by
constraints upon the decision.

Sampling Theory
A quantitative technique where
samples of population are statistical
determined to be used for a number
of process, such as quality control
and marketing research.

Statistical Decision- Theory

Refers to the rational way to
conceptualize, analyze, and
solve problems in situations
involving limited or partial
information about the decision
environment.

Summary