Decision Making

 DECISION MAKING: 

 Choosing one alternative from more than one.  Here we have two options & we have to choose only one option.

RATIONAL DECISION MAKING 

STYLES OF THINKING AND DECISION   MAKING     

UNTESTED OPINION  

Form of knowing and believing without any observation or factual ground. For example general perception that females are  not capable / able or they cannot do anything important.  

SELF EVIDENT TRUTH 

Based on a person’s or a group’s fact finding. But this can later on prove to be wrong.  

AUTHORITY 

A person, a senior an expert is sometimes made to be the authority and his opinion or idea is generally accepted, which can later on prove to be wrong. 

INTUITION 

This means gut feeling, having no explicit evidence of being correct. It may or may not be correct.  

LITERARY STYLE  

Based on literature and case studies or the theories and discussions in the books and journals.     

IDEALISM  

Living in an imaginary world and believing the facts as per ideal situation. 

POSTULATION  

Putting forward something as a fact or accept true as a basis for reasoning or argument. This is based on mathematical and statistical calculations. Studies in operations research ad mathematical modeling tend to be postulational.  

RELIGIOUS  

Based on religious injunctions or the teachings of the scriptures and prophets. 

 SATISFYING 

 Acceptances of solutions that are good enough. 

EMPRICISM  

To denote observations and propositions based on sense, logic or experience. This is close to scientific style of thinking.  

RATIONAL  

Rational decision making is based on true facts and figures, research and investigation, after studying all aspects of the available options and alternatives and then choosing the alternative, which may be solve the problem and help in the achievement of goals. 

DECISION  MAKING FRAMEWORK  

Means the situations under which managers make decisions. 

Certainty  

Uncertainty  

Risk Conflict  

Pressure 

 Lack of Structure 

Certainty:   When there is no risk. Uncertainty:  When there is risk.  

Risk: The situation where the probability of success is less than 100%  

Conflict: Lack of convergence or disagreement about ideas and opinions.    

Pressure:   Stress from the upper management, internal or external factors. 

Lack of Structure:   How much structured are the problems. There are two types of problems with regard to structure. 

Structured Problems:   The problems that have objectively correct answers. For example computing the salary or commission of employees.  

 Unstructured Problems:  Which may have no proven answers. May lead to a number of solutions all of which may have merits and demerits. Suppose hiring the key person of your competing company. 

FACTORS WHICH HINDER RATIONAL DECISION MAKING 

Pressure  of time, resources, situation and management.  

Lack of proper Information which is needed for decision making.  

Organizational Policies sometimes forbid you from rational DM.  

Organizational Politics are also a factor. Overconfidence of the manager that he is right. 

Lack of Confidence or fear also becomes a factor of avoiding R DM  Perceptions, biases or self-interest of the managers about certain things.   

DECISION MAKING PROCESS 

 STEPS OF RATIONAL DECISION MAKING 

 Identification of Problem  

Identification of Decision Criteria  

Allocation of Weights to Criteria  Development of Alternatives  

Analysis of Alternatives  

Selection of an Alternative  

Implementation of Alternative  

Follow up   

Explanation 

 Identification of Problem:  

First of all you have to define the problem. Otherwise you may go to a wrong direction. 

 Identification of Decision Criteria:  

Suppose if you want to purchase computers for your company, you will decide about the following things likeQuality and Reliability Price After Sales Services (Warranty, Guaranty Accessibility Social Acceptability.

      Allocation of Weights to Criteria:  

This means that you will allocate weightage or points to different aspects of decision criteria  

or example  you allocate the points in the following way  

Quality and Reliability 30 Price 30After Sales Services (Warranty, Guaranty 20Accessibility 10 Social Acceptability 10   

Development of Alternatives:  

You will consider various options or companies selling the computers like Compaq 

IBM 

Dell 

Acer

Sony  

Analysis of Alternatives:  

You will compare the options as per decision criteria. Quality Price Services Access Social 

 Compaq 

 IBM 

 Dell  

Acer Son 

Selection of an Alternative:  

After the comparison, you will select a particular option or alternative  

Implementation of Alternative: 

 Implementing the alternative means to put the decision into practice. In this case you will purchase the computers. 

Follow up: 

 This means to see after some time as to the decision proved right or wrong.    

TYPES OF DECISIONS  

PROGRAMMED DECISION    

  NON PROGRAMMED DECISIONS

 INNOVATIVE DECISIONS  

PROGRAMMED DECISIONS:  

A simple decision which may be based on structured problem and may be handled with a routine approach or previous solution. Like hiring of a new sales person. 

 NONPROGRAMMED DECISIONS: 

 An unusual decision based on unstructured or new problem, which may be resolved through some different approach by studying and investigating the entire situation. Like launching of a new product, changing manufacturing procedures and techniques.  

INNOVATIVE DECISIONS:  

A decision based on highly unusual, complex and ambiguous problems, which may need a creative and imaginative solution. For example, merger of some other company, selling of a unit or division to some other company etc. 

TYPES OF DECISIONS 

Directive 

Analytic 

 Conceptual 

Participative  

Directive: 

 Quick and speedy decision maker, who makes decisions with minimum information gathering and focusing on short run. 

Analytic:  

Careful decision makers who make decisions with analysis of the situation. 

  Conceptual:  

They are characterized as creative decision makers, who have the capability to cope up with unique situations with the use of the power of intuition and imagination. 

Participative: 

 They make the decisions with the involvement of the concerned team members.   

ADVANTAGES OF PARTICIPATIVE DECISION MAKING    

More information or input 

More Alternative 

Acceptance from the others  

 Legitimacy  

Cooperation in Implementation  

DISADVANTAGES  

Time Consuming  

 Group Dominance  

Affecting  

 Conflicts  

CREATIVITY   

Creativity:   

Creativity means deciding what do you want to do? How can you do it and how can you do it better? 

  

Creating something out of nothing Synthesizing or combining  

changing or modifying 

HOW TO DEVELOP CREATIVITY  

Be relaxed  

Exercise your mind 

Determine what do you want to do? 

Look for ways to tackle the problem 

Look for ways to do better 

Read books 

See different people, places, systems, procedures  

Good and peaceful life in terms of political, social and economic circumstances.