Decision - Making

Decision Making as a
Management
Responsibility

Decision

making
is
a
responsibility of the engineer
manager. It is understandable
for managers to make wrong
decisions at times. The wise
manager will correct them as
soon as they are identified.

BIG
ISSUE???
ASAP!!!

The higher the management

level is,
the bigger and more
complicated
decision-making
Becomes.

What is Decision - Making

The process of
identifying and
choosing alternative
courses of action in a
manner appropriate to
the demands of the
situation.

Decision - Making

The heart of all the

management functions ,
according to nickels.

The Decision
Making Process

1.Diagnose problem
2.Analyze environment
3.Articulate problem or opportunity
4.Develop viable alternatives
5.Evaluate alternatives
6.Make a choice
7.Implement decision
8.Evaluate and adapt decision results

Diagnose Problem
If a managers wants to make an
intelligent decision, his first move
must be to identify the problem.
of the problem is
AIdentification
problem exists
when there
tantamount to having the problem
is a difference between an
half-solved.

What is a Problem?
actual situation and a
desired situation.

!
!
!
M
E
L
B
O
R
Desired
P Situation
Actual
Situation

Analyze the
The environment where the
organization
is situated plays a very
Environment

significant role in the success or

failure of such an organization. It is
therefore, very important that an
analysis of the environment be
undertaken.
The objective of environmental
analysis is the identification of
constraints, which may be spelled out
as either internal or external
limitations.

Analyze the
Components of the Environment:
Environment
1. Internal refers to organizational
activities within a firm that
surrounds decision making.
2. External refers to variable that are
outside the organization and not
typically within the short-run control
of top management.

Develop Viable
Oftentimes,
problems may be solved by
Alternatives
any of the solutions offered. The best
among the alternatives solutions must
be considered by management.
Procedures are as follows:
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.

Evaluate
After determining
the viability of the
Alternatives

alternatives and a revised list has been

made, an evaluation of the remaining
alternatives is necessary.

Make a Choice
After the alternatives have been
evaluated, the decision maker must
now be ready to make a choice. This is
the point where he/she must be
convinced that all the previous steps
were correctly undertaken.
Choice-making refers to the process of
selecting among alternatives
representing potential solutions to a
problem.

Implement Decision
After a decision has been made,
implementation follows. This is
necessary, or decision-making will be an
exercise in ineffectiveness.
Implementation refers to carrying out
the decision so that the objectives
sought will be achieved. To make
implementation effective, a plan must
be devised.

Approaches in
Problem Solving

In decision making, the engineer

manager is faced with problems which
may either be simple or complex.
1. Qualitative Evaluation
2. Quantitative Evaluation

1. Qualitative
This term refers to evaluation of
alternatives using intuition and
subjective judgment.
Stevenson states that managers tend to
use the qualitative approach when:
1. The problem is fairly simple.
2. The problem is familiar.
3. The cost involved are not great.
4. Immediate decisions are needed.

2. Quantitative
This term refers to the evaluation of
alternatives using any technique in a
group classified as rational and
analytical.

Quantitative Models
for Decision Making
1.
2.
3.
4.
5.
6.
7.
8.
9.

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

Thank YOU