Lesson 2 Decision Making

Decisions must be made at various levels in the workplace. They are also made at the various stages in the management process.

Decision making is a responsibility of the engineer manager. It is understandable for managers to make wrong decisions at times. The problem is if he/she cannot make his/her own decisions.

Management must strive to choose a decision option as correctly as possible. The higher the management level is, the bigger and the more complicated decision making becomes.

Decision Making may be defines as

the process of identifying and choosing

alternative courses of action in a manner

appropriate to the demands of the

situation. This points out that an engineer

manager must adapt a certain procedure

designed to determine the best option

available to solve certain problems.

Rational Decision Making according to David H. Holt is a process involving the following steps:

1. Diagnose Problem

2. Analyze Envt

3. Articulate Problem/Opportunity

4. Develop Viable Alternatives

5. Evaluate Alternatives

6. Make A Choice

7. Implement Decision

8. Evaluate and Adapt Decision Results

To provide an engineer manager with

some guides in decision making, he must

be familiar with the following

approaches:

1. Qualitative Evaluation

2. Quantitative Evaluation

This term refers to evaluation of

alternatives using intuition and subjective

judgment. Stevenson states that

managers tend to use this approach

when:

1. The problem is fairly simple

2. The problem is familiar

3. The costs involved are not great

4. Immediate decisions are needed.

This term refers to the evaluation of

alternatives using any technique in a group

classified as rational and analytical.

Inventory Models

Queuing Theory Network Models

Forecasting

Regression Analysis

Simulation

Linear Programming

Sampling Theory

Statistical Decision Theory

Economic Order Quantity Model – used to calculate the number of items that should be ordered at one time to minimize the total yearly cost of placing orders

Production Order Quantity Model – an EOQ technique applied to production orders

Back Order Quantity Model – an invty model used for planned shortages

Quantity Discount Model – used to minimize the total cost when quantity discounts are offered by suppliers

This describes how to determine the

number of service units that will minimize

both customer waiting time and cost of

service.

Program Evaluation Review Technique – a technique which enables engineer managers to schedule, monitor, and control large and complex projects by employing three time estimates for each activity

Critical Path Method – a network technique using only one time factor per activity that enables engineer managers to schedule, monitor, and control large and complex projects

The collection of past and current

information to make predictions about

the future.

1. Naïve Approach

2. Simple Moving Average

3. Weighted Moving Average

It is a forecasting method that examines

the association between two or more

variables.

It is a model constructed to represent

reality, on which conclusions about real

life problems can be used. Simulation

does not guarantee an optimum

solution, but it can evaluate the

alternatives fed into the process by the

decision maker.

It is a quantitative technique, that is used

to produce optimum solution within the

bounds imposed by constraints upon the

decision.

It is a quantitative technique where

samples of population are statistically

determined to be used for a number of

processes, such as quality control and

marketing research.

Decision Making is a very important

function of the engineer manager. His

organization will rise or fall depending

on the outcomes of his decisions. It is,

therefore, necessary for the engineer

manager to develop some skills in

decision-making.