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Managerial Decision making &

Problem Solving

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This session includes.. Why Decision making is needed? Types of Decision making ? How to select a model ? 6 steps is Decision making process. Different models in Decision making

and in Decision Support System.

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Decision Making.. Needed for any organization to reach

its objectives and goals.

Is the element of Problem solving.

Requires strategic planning and decision analysis.

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Decision making the process of identifying problems and opportunities, then resolving them.

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Decision - Types

Programmed AndNon – programmed

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Programmed Made using a rule, procedure or

quantitative methode.g. fixed sitting arrangement

Are easy to computerized

MIS are used to solve Programmed Decision

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Non-programmed Unstructured or ill-structured Deal with unusual/exceptional situation Difficult to quantify Rules, procedures are not so obvious Decision Support system are used to

solve the Non-programmed Decision.e.g. whether to start a new product line

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Programmed decisions:# situations that occur often enough to enable decision rules to be developed.

Nonprogrammed decisions:# are made in response to situations that are

unique, are poorly defined and largely unstructured.

# many involve strategic planning.

Therefore…

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Selecting aDecision Making ModelDepends on the manager’s personal

preference.

Whether the decision is programmed or non-programmed.

Extent to which the decision is characterized by risk, uncertainty, or ambiguity.

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Six Steps in the Managerial Decision Making Process

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Models of Decision Making

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Hertbert Simon Model Intelligence Phase

- Information gathered that relates to the cause and scope of problem

- Potential problems or opportunities are identified and defined

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Design Phase- Developing the alternative solution

- Evaluating the feasibility of the alternatives

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Choice Phase- Requires selecting a course of action

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Intelligence Design Choice

Hertbert Simon Model for Decision Making

Hertbert Simon Model

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George Huber Model forProblem Solving Problem solving includes Decision

making and goes beyond that. Expansion of Decision Making model Includes

- Implementation and Monitoring Phase

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Implementation Phase- when the solution is put into effect

Monitoring Phase- Evaluate the implementation

- involves feedback and adjustment

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Intelligence Design Choice Implementation Monitoring

George Huber expanded model for Problem solving

George Huber Model

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Decision Support System

An organized collection of people, procedures, software, databases and devices used to support problem-specific decision making.

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DSS – 3 models Optimization Model

- offers the best solution- to help the organization meets its

goals- utilize problem constraint- reduce the time and cost to increase

the profits

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Satisficing Model- When the decision would be difficult, complex, or costly.- good alternative modeling method( to analyze each alternative is too expensive)- looks only at those likely to give good results

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Heuristic approach Defined guidelines or Procedures Also said as “rules of thumb”

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Questions from your side..

Thank you.