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Unit – 4 : Decision Making
By RADHIKAFaculty of Commerce &
ManagementJ H B W C
Introduction Decision Making
Cont. Decision-making is an essential aspect of modern management.
A manager's major job is sound/rational decision-making. He takes hundreds of decisions consciously and subconsciously. Decision-making is the key part of manager's activities. Decisions are important as they determine both managerial and organizational actions.
It is rightly said that the first important function of management is to take decisions on problems and situations. Decision-making pervades all managerial actions.
It is a continuous process. Decision-making is an indispensable component of the management process itself.
Definition “Decision Making is the technique of solving problems and
selecting the best alternative course of action form the given alternative.” - Donald
“Decision Making can be defined as the selection based on some criteria of one behavior alternative from two or more possible alternatives.” -George R Terry
Meaning The word 'decision' is derived from the Latin
words ‘de ciso’ which means 'a cutting away or a cutting off or in a practical sense' to come to a conclusion. Decisions are made to achieve goals through suitable follow-up actions. Decision-making is a process by which a decision (course of action) is taken. Decision-making lies embedded in the process of management.
Characteristics1. Management’s
functions 2. Rational Activity
3. Continuous process
4. Intellectual process
5. Alternative process
6.Based on qualitative technique & evaluation
7. Positive or Negative form
8. Managerial commitment & Dedication
Steps in Decision Making
1. Defining the Problem
2. Collecting related
Information
3. Classification & Analysis
of Information
4. Formulation
of Various alternatives
5. Critical evaluation of alternatives
6. Selecting the Best
Alternatives
7. Implementati
on of Alternatives
Techniques of Decision Making
Traditional Technique
Internal Motivation
Past Experience
Based on Reality & experiences
Cont. Modern Technique
Operations Research (advanced analytical methods to help make better decisions)
PERT (to analyze and represent the tasks involved in completing a given project)
CPM Decision Tree (model of decisions and their
possible consequences, including chance event outcomes)
Linear Programming (such as maximum profit or lowest cost)