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DECISION MAKINGPresentation by:

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INTRODUCTION

Decision: A choice between two or more then two alternatives is called decision.

Decision making is the act of choosing one alternative from among a set of alternatives.

We have to first decide that a decision has to be made and then secondly identify a set of feasible alternatives before we select one.

CHARACTERISTICS OF DECISION MAKING

•It is a process of choosing a course of action from among the alternative course of action.

•It is a human process involving to a great extent the application of intellectual abilities.

•It is the end process preceded by deliberation & reasoning.

•It is always related to the environment. A manager may take one decision in a particular set of circumstances & another in a different set of circumstances.

CHARACTERISTICS OF DECISION MAKING

•It involves a time dimension & time lag.

•It always has a purpose. Keeping this in mind, there may be a decision not to decide.

•It involves all actions like defining the problem & probing & analysing the various alternatives which take place before a final choice is made.

DECISION MAKING STEPS

DECISION MAKING STEPSIdentify the Problem:

When making a decision a person first needs to identify and define theproblem or conflict.

Identify Decision Criteria:

When a problem identified, the decision criteria important to resolving the problem must be identified. That is, managers must determine what is relevant in making decision.

DECISION MAKING STEPS

Allocation of Weights to criteria:

If the relevant criteria are not equally important, the decision maker must weight the items in order to give them the correct priority in the decision.

Development of Alternatives:Here the decision maker requires to list viable alternative that could resolve the problem. This is the step where a decision maker needs to be creative.

DECISION MAKING STEPSChoose One alternative:After making all the alternatives, the next step in decision making is to evaluate these alternatives. Evaluation is required in order to select the best alternative for implementation.

Implementation of the Alternative:

After choosing best alternative decision is to action by conveying it to those effected and getting their commitment to it.

DECISION MAKING STEPSEvaluation of Decision effectiveness:The last step the decision making process involve evaluating the outcome or result of thedecision to see if the problem is resolve.

6 C’S OF DECISION MAKING

1. Construct.2. Compile.3. Collect. 4. Compare.5. Consider.6. Commit.

Construct a clear picture of precisely what must be

decided.

Compile a list of requirements that must be met.

Collect information on alternatives that meet the

requirementsCompare alternatives that meet your

requirements.

Consider the “WHAT MIGHT GO WRONG” factor with

each alternative.Commit to a decision and follow through

with it.

C’S OF DECISION MAKING

DECISION TYPES

Individual & Group Decision

Organizational & Personal Decision

Routine & Strategic Decision

Policy & Operating Decision

Programmed & Non-Programmed

Decision

Individual: When a decision is taken by an individual in the organization, it is known as individual decision.

• Such decision are generally taken in small organization.

Group : It refers to the decision which are taken by a group of organizational members, say Board of Directors or a committee.

DECISION TYPES – INDIVIDUAL & GROUP

Organizational: these are those which a manager takes in his official capacity.

• Such decision can be a task to another person.

Personal: These are related to the manager as an individual & not as a member of the organization, cannot be a task to another person.

DECISION TYPES – ORGANIZATIONAL & PERSONAL

Routine: These are made repetitively following certain established rules, procedures & policies.•They neither require collection of new data nor conferring with peoples.Strategic: Decisions that are concerned with whole environment in which the firm operates, the entire resources and the people who form the company and the interface between the two.

DECISION TYPES – ROUTINE & STRATEGIC

Policy : Decisions that define the basic principles of the organization and determine how it will develop and function in the future.Example : Vision, Mission, Aim, Budget and Finance Practices, Allocation of Resources

Operating : Decisions that involve determining and planning short-term objectives and goals concerning routine tasks.Examples : Budgeting for the number of employees, determining the company's cash needs, scheduling personnel or equipment.

DECISION TYPES – POLICY & OPERATING

Programmed : Decisions that are simple and routine and have a pre established decision making plan.

•These are made for solving routine & repetitive problems.

•These involve less use of judgment.

DECISION TYPES – PROGRAMMED & NON-PROGRAMMED

DECISION TYPES – PROGRAMMED & NON- PROGRAMMED

Non-Programmed : Decisions that are new and complicated and require thought and creativity.

•Decision are made by using experience, creativity & innovativeness.

•These involve more use of experience & judgment.

ASSETS OF GROUP DECISION MAKINGAssets +

• Group can accumulate more knowledge and facts.• Groups have a broader perspective and consider more alternatives.•Individuals who participate in group decision are more satisfied with the decision and are more likely to support it.•Group decision processes serve an important communication function as well as a useful political function.

LIABILITIES OF GROUP DECISION MAKING

Liabilities –

• Groups often work more slowly than individuals.

• Group decision involve considerable compromise that may lead to less than optimal decision.

• Groups are often dominated by one individual or a small clique, thereby negating many of the virtues of group processes.

• Overreliance on group decision making can inhibit management’s ability to act quickly and decisively when necessary.

MODERN APPROACH TO PROBLEM SOLUTIONBrainstorming • Generate as many ideas as possible.• Hold off on decision until idea generation is over.• Quantity over quality.• Build upon others’ ideas.• Maximum number of ideas in short period of time.• Once all the ideas are on the table, the best possible solution under the circumstances should emerge

MODERN APPROACH TO PROBLEM SOLUTION

Nominal Group Technique (Refined Brainstorming)

• No one knows who suggested idea or what one they prefer.

The NGT consist of 4 phases Individual Members meet in group & sits silently & generate their ideas. No discussion of the idea is allowed at this timeThe ideas are summarized & recordedThe final outcome is determined by pooled outcome of the members vote on the issue.

MODERN APPROACH TO PROBLEM SOLUTION

Delphi Technique

• Gather judgments of experts for use in decision making • Experts give alternatives• Alternatives summarized and returned back to experts for voting• Experts choose “best” alternative• This technique never allows decision participant to meet face to face.

MODERN APPROACH TO PROBLEM SOLUTION

Globalization

• It is a tendency to integrate activities on a co-ordinated world wide basis.• Firms are pushed in the direction of globalization.• The benefits gained from volume efficiencies or economies of scale.• the minimally efficient production scale is beyond that could be supported in a single market.

FACTORS EFFECTING DECISION MAKING

Inadequate informationTime & costPerception of decision makerExperience of decision makerDecision maker’s personalityValues of decision makerCapacity of decision maker

Inadequate informationDecision maker have inadequate information about the problem, possible alternatives & their strengths & limitations.Time & CostThis are the limiting constraints throughout the decision making process.

Perception of Decision makerDecision maker’s perception in identifying the problem, selecting alternatives may ignore the actual critical problem.

FACTORS EFFECTING DECISION MAKING

Experience of decision makerIf decision are to be taken with less information than extensive experience with situation becomes the key input.

Decision Maker’s PersonalityThe perfectionist decision maker may postpone taking decision, preferring to seek the ideal alternative.The impulsive decision maker might hurry through the decision process thinking that just to finish it at the earliest.

FACTORS EFFECTING DECISION MAKING

Values of Decision MakerA decision maker must not reflect his own personal values rather than company’s need or the personal values must not influence both the goals & the result of the decision process.

Capacity Of Decision MakerEven after gathering perfect information, it is the intelligence & calculating capacity of the manager which limits the success of any plan & decision.

FACTORS EFFECTING DECISION MAKING

CONCLUSIONAll decision-making involves elements of risk and reward. For every decision there are risks. Many organisations are structured so that major decisions are taken at the highest levels. This is because decisions at the top can have major effects for the whole organisation.

The engineers of today and tomorrow are people who make important and sometimes vital decisions. They have to be problem-solvers who enjoy working with people in teams and with real problems related to materials, processes and equipment. The excitement of a career in engineering comes from knowing that you will develop solutions to problems which haven't yet been thought of.

BIBLIOGRAPHY

Reference Links :http://www.managementstudyguide.comhttp://simplestudies.comhttp://businesscasestudies.co.uk

Reference Books :Technical Publication : V.S BagadSun India Publication : T.N Chhabra

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