DECISION MAKING

Decision making:

The act of choosing one alternative from among a set of alternatives.The process of developing and analyzing alternatives and choosing from themDecision-making process:

Recognizing and defining the nature of a decision situation, identifying alternatives, choosing the best alternative, and putting it into practice.

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ProgrammedNonprogrammed

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1. Programmed Decision MakingRoutine, virtually automatic decision making that follows established rules or guidelinesA decision that is fairly structured or recurs with some frequency (or both).i.e. when storage shelves are three quarter empty, order more copy paperi.e. whenever student enrollment increase by 40%, hire a new lecturer2 - *

2. Non-Programmed Decision MakingNon-routine decision making that occurs in response to unusual, unpredictable opportunities and threatA decision that is relatively unstructured and occurs much less often than a PROGRAMMED DECISION.i.e. enter a new market, expand internationally, managing a rescue work for a plane crashDepend heavily on judgment and intuitionJudgment develop opinion based on the information on handIntuition make decision based on past experience and immediate feeling about information on hand2 - *

Certainty

A situation in which manager can make accurate decisions because all outcomes are knowni.e. deposit money- which bank to choose- interest rate know how much interest we will get by the year end from each bank decide which bankUncertainty

A situation in which a decision maker has neither certainty nor reasonable probability about the outcomei.e. no one can accurately predict the turnout for new story-telling festival, when many families are busy with school activities and other eventsRisk

Decision maker is able to estimate the likelihood of certain outcome based on personal experience or secondary informationi.e.. Hotel Manager- for the past 3 years client increase during the year end estimate this year will also be the same- so wants to increase the number of rooms to increase profits.2 - *

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A process that helps management weigh alternative and choose the alternative with the best chance of success

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STEPS1. Recognize and diagnose problems.2. Identify objectives.3. Generate alternatives.

4. Evaluate alternatives.

5. Select alternative/reach decisions.6. Implement alternative.7. Follow up and evaluate results (monitoring)2 - *

Argues that the decision-makers:-Have incomplete and imperfect informationAre constrained by bounded rationalityTend to satisfice when making decisions

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Decisions are made by groups and teams rather than by individuals.2 - *

BrainstormingDelphi techniqueNominal group technique

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Is a decision making technique in which members openly discuss, argue about, and agree on the best alternative

Advantage:- Interaction sparks new ideas and promotes understanding2 - *

A group decision making technique in which a group is used to achieve a consensus of expert opinion.Combine opinions of experts.Group members do not see each other.

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A structured technique used to generate creative and innovative alternatives or ideas.Group members do not interact freely & write down alternatives individually.Discussion is limited to simple clarification.The decision is based on high-ranking alternative.

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More information and knowledge are availableMore alternatives are likely to be generatedMore acceptance of the final decisionEnhance communication of the decisionBetter decisions

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The process is longer than individual decision making, and costlierCompromise decisions resulting from indecisiveness may emergeOne person may dominate the groupGroupthink may occur

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A situation that occurs when a group or teams desire for consensus and cohesiveness overwhelms its desire to reach the best possible action.2 - *