DECISION MAKING

SANALRAJ.M.K JWM/OFILKN

Decision making
Decision making is the process of choosing between alternatives to achieve a goal.
Decision making can be hard. Almost any decision involves some conflicts or dissatisfaction. The difficult part is to pick one solution where the positive outcome can outweigh possible losses. Avoiding decisions often seems easier. Yet, making your own decisions and accepting the consequences is the only way to stay in control of your time, your success, and your life. If you want to learn more on how to make a decision, here are some decision making tips to get you started. started.

Managerial Decision Making

 Decision  It

making is not easy

must be done amid

 ever-changing ever-

factors  unclear information  conflicting points of view

Decisions and Decision Making

 Decision

= choice made from available alternatives

 Decision

Making = process of identifying problems and opportunities and resolving them

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Three phases in Decision making in general

 1.The

PastPast- in which problems developed, information accumulated and the need for a decision was perceived.  2.The Present- in which alternatives are Presentfound and the choice is made;  3. The Future- in which decisions will be Futurecarried out and evaluated

Phases of decision making in an organisation

 Phase

11- Identification here the recognition of a problem or opportunity arises and a diagnosis is made. It was found that severe immediate problems did not have a very systmatic , extensive diagnosis but that milder problems did have.

The development phase During this there may be a search for existing standard procedures, ready-made readysolutions or the design of a new, tailor made solution. It was found that the design the design process was a grouping, trial and error process in which the decision makers had only a vague idea of the ideal solution.

 Phase-2Phase-

 Phase-3Phase-

during which the choice of a solution is made. There are three ways of making this selection: by the judgment of the decision maker, on the basis of experience of intuition rather than logical analysis; by analysis of the alternatives on a logical, systematic basis; and by bargaining when the selection involves a group of decision makers. Once the decision is formally accepted an authorisation is made.

Types of managerial decisions

 1.personal

and organisational decisiondecisionpersonal decision cannot ordinarily be delegated to others , whereas organisational decisions can often if not always be delegated.  Personal decision can affect the organisation

 2.

Basic and routine decision  Basic decisions are those which are unique, one time decisions involving long range commitments of relative permanence or duration, or those involving large investments.  Eg- plant location organisational structure, Egwage negotiation etc

 Routine

decisions are everyday, highly repetitive, management decisions which by themselves have little impact on the overall organisation. organisation. for example supervisor make practically all the routine decisions where as chairperson takes basic decision.

Programmed& non programmed decision

 Programmed

decisions are typically handled through structured or bureaucratic techniques(SOP)  Non programmed decisions must be made by managers using avialable information and their own judgment. As is often the case with mangers, however, decisions are made under the pressure of time.

Gresham s Law of planning



This law states that there is a general tendency for programmed activities to overshadow non programmed activities. Hence if you have a series of decisions to make those that are more routine and repetitive will tend to be made before the ones that are unique and require considerable thought. This happens presumably because you attempt to clear your desk so that you can get down to the really serious decisions, unfortunately the desks very often never get cleared

Modes of decision making

decision is one that is routine and repetitive in nature. It usually occurs in a situation involving a limited number of decision variables where the outcomes of each alternative are known Most mechanistic decision problems are solved by habitual responses, SOPs or clerical routines
 1.Mechanistic

 2.

Analytical decision  Involves a problem with a large number of decision variables, where the outcomes of each decision alternative can be computed. Many complex production and engineering problems are like this.these are solved by linear programming

Judgmental decision  Involves a problem with a limited number of decision variables, but the out comes of decision alternatives are unknown.many marketing and resource allocation problems come under this.
 3.

Adaptive decision  Involves a problem with a large number of decision variables, where outcomes are not predictable. Because of the complexity and uncertainty of such problems decision makers are not able to agree on their nature or on decision strategies.
 4.

Decision making under different states

 1.

Decisions under certainty  2.Decisions under Risk  3.Decisions under uncertainty  here under certainty manager knows the precise outcome associated with each possible alternative. Exact results are known in advance with (100% ) certainty. The probability is one.

 Decisions

making under risk  Here a single action may result in more than one potential outcome, but relative probability of each outcome is known. Here alternatives are recognized but their resulting consequences are probabilistic and doubtful

 Decision

making under uncertainty when a single action may result in more than one potential outcome, but relative probability of each outcome is unknown. Here manager has no knowledge whatsoever on which to estimate the likely occurrence of various alternatives. Decisions under uncertainty occurs in cases where no historical data are available.

Conditions that Affect the Possibility of Decision Failure

Organizational Problem Low Certainty Possibility of Failure Risk Uncertainty High Ambiguity

Programmed Decisions Problem Solution

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Nonprogrammed Decisions

Increasing Knowledge Complete Knowledge Certainty Risk Uncertainty

Lack of Knowledge

Decreasing knowledge

Six Steps in the Managerial DecisionDecision-Making Process

Evaluation Recognition of Decision and Feedback Requirement

Implementation of Chosen Alternative

DecisionMaking Process

Diagnosis and Analysis of Causes

Selection of Desired Alternative

Development of Alternatives

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Techniques/tool used for decision making

1.

Heuristics these are some kind of thump rules based on past experience 2. Brain storming