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@ What is a problem?
@ An situation which does not yield satisfying results is a problem
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@ What is a problem solving?
@ Problem solving can be defined as the process of identifying a
difference between the actual state and desired state of affairs
and them taking action to resolve the differences.
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@ 3he following seven steps are involved in the process of
problem solving
1. Identify and define the problem
2. Determine the set of alternative solutions
3. Determine the criterion or criteria that will be used to
evaluate the alternatives
4. Evaluate the alternatives
5. Choose an alternative
6. Implement the chosen alternative
7. Evaluate the results to determine whether a satisfactory
solution has been obtained.
 



@ 3he process of decision making is associated with the
first five steps of problem solving process.
@ Decision making ends with the choosing of alternative.
@ Decision making is a cognitive process is identifying the
best possible course of action
@ It involves both the conscious and sub-conscious mind
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1. Cognitive stage
@ 3he initial stage when the environment is scanned to
ascertain the facts
2. Assembly stage
@ 3he facts obtained in step 1 are assembled to get usable
information
3. 3esting stage
@ Evaluates the information obtained in relevance to the
problem
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@ Dishonesty
@ adopting shortcuts without actually going through the
decision making process
@ Inertia
@ Hesitation to start something
@ Impatience
@ Reaching a conclusion without reasoning
@ Acquiescence
@ Doing something without questioning
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@ £ambling
@ Adopting trial and error methods
@ Semantics
@ 3rying to brush aside the decision making process as time
consuming and highly complicated
@ Falsification
@ Not solving the problem but claiming the problem has been
solved by projecting wrong information
 



@ ou have 4 jobs on hand ² 3CS, Infosys, Wipro,
Satyam
@ Single-criterion decision problems ² maximum salary

©

  
3CS Rs. 35,000
Infosys Rs. 33,000
Wipro Rs. 34,000
Satyam Rs. 34,500
 



@ ou have 4 jobs on hand ² 3CS, Infosys, Wipro,
Satyam
@ Multi-criterion decision problems ² location,
prospects and salary
©

  
 
 

3CS Rs. 35,000 Average Average
Infosys Rs. 33,000 Excellent £ood
Wipro Rs. 34,000 £ood Excellent
Satyam Rs. 34,500 Average £ood
  




Structuring the problem Analysing the problem

Qualitative
Define Identify Determine analysis Make a
Summary and
the the the evaluation decision
problem alternatives Quantitative
criteria analysis
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@ Qualitative analysis is primarily based on
@ Manager·s judgment and experience
@ It includes the manager·s intuitive ´feelµ for the problem
@ Is more an art than a science
@ 3he manager has to be highly experienced
Î 
    



@ Quantitative analysis is involved when
@ Manager has little or no experience
@ Problem is sufficiently complex
@ 3he problem is especially important and a thorough analysis is
required
@ 3he problem is repetitive
 
   




Uncontrolled
inputs

Environmental
Controllable factors
Inputs or
Factors 1. Deterministic
Output or
2. Stochastic or results
probabilistic
Land Product
Capital Idea
Labour Services
3echnology
Mathematical Model
Process of decision
making
Feed Back
Î 
  
 
@ 3o apply quantitative analysis to decision making, a
conceptual model must be developed to represent the
problem mathematically
@ 3he conceptual model represents the logic that underlies
a decision.
@ 3he model includes the problem, constraints, and other
real life inputs that affect decision making.
@ 3he model is solved to find the best solution
©

@ 3he X Company during the festival season combines two factors A and B to form a gift pack
which must weigh 5 kg.
@ At least 2 kg of A and not more than 4 kg of B should be used.
@ 3he net profit contribution to the company is Rs. 5 per kg. for A and Rs. 6 per kg for B.
@ Formulate a model to find the optimal factor mix.

@ 
@ 
  
@ Let [1 = Kgs of Product A
@ Let [2 = Kgs of Product B
@ 
 


@ Maximize: = 5[1 + 6[2
@ 
 




@ [1 + [2 = 5 [ 3otal weight of pack ]
@ [1 • 2 [ Minimum requirement of A ]
@ [2 ” 4 [ Maximum requirement of B ]
@ 
  !

"


[1 • 0 and [2 • 0
º

 
  
 

 

@ Marketing ² for product survey, to analyse data on population,
habits of customers, competitors, pricing
@ Finance ² analysis of profits, financial forecasts, break-even
analysis, investment decisions, expenditure analysis
@ Production ² inventory management, improvement in quality
of products, setting quality control standards
@ Personnel ² manpower planning, labour turnover rates,
employment trends
@ Sales ² forecast purposes, preparation of sales budgets
@ Personal evaluation ² psychometric tests used to assess
interest and aptitude of students
·  


Î3
@ 3hey involve mathematical expressions
@ 3he models are highly expensive
@ 3hey do not involve qualitative aspects
@ 3hey need expert knowledge both in theory and practice