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Decision MaPresented By: Sajjad Ahmad Qadri
Minhaj University, Lahore
ESSENTIALS OF M
Sixth Edit
Weihrich and
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After studying this chapter, you understand
1.
2.
3.
4.
Decision making as a rational process.
The
The
The
development of alternative courses of action
selection from among alternatives.
differences between programmed andnonprogrammed decisions.
Decisions made under conditions of certainty,
uncertainty, and risk.
The importance of creativity and innovation in
managing.
The major principles, or guides, for planning
5.
6.
7.
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Decision Making
Decision making is defined as theselection of a course of action from
among alternatives
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Decision Making Process
1.
2.
3.
Premising,
Identifying alternatives,
Evaluating alternatives in terms
goal sought, andof the
4. Choosing an alternative,making a decision
that is,
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Limited, or "Bounded," Rationality
Limitations of information, time, andcertainty limit rationality, even though a
manager tries earnestly to be
completely rational
Satisficing is picking a course of actionthat isunder
satisfactory or good enoughthe circumstances
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Development of Alternatives and theLimiting Factor
A limiting factor is something thatstands in the way of accomplishing a
desired objective
The principle of the limiting factor:
recognizing and overcoming thosefactors that stand critically in the way
By
of
a goal, theaction can
2004 H. Weihrich
best alternative course ofbe selected
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Quantitative and Qualitative Factors
Quantitative factors are factors thatcan be measured in numerical terms
Qualitative, or intangible, factorsare
those that are
numerically
difficult to measure
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Marginal Analysis
Marginal analysis is to compareadditional revenues and the additional
outputcost arising from increasing
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Cost Effectiveness Analysis
Cost effectiveness analysisseeks thebest ratio of benefit and cost
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Selecting an Alternative: ThreeApproaches
When selecting from amongmanagers can use:
alternatives,
1.
2.
3.
Experience,
Experimentation, and
Research and analysis.
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Programmed And NonprogrammedDecisions
Programmed decisions are used forstructured or routine work
Nonprogrammed decisions are used
for unstructured, novel, andsituations of a nonrecurring ill-definednature
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Creativity and Innovation
Creativity refers to the abilitypower to develop new ideas
and
Innovationmeans the use of new ideas
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The Creative Process The creative process is seldom simple and
linear It generally consists of four
interacting phases:
Unconscious scanning
Intuition
Insight
overlapping and
1.
2.
3.
4. Logical formulation or verification
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Rules for Brainstorming
1.
2.
No ideas are criticized
The more radical the ideas are, the
better
3. The quantity of ideastressed
production is
4. The improvementencouraged
of ideas by others is
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