Decision making

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Decision making

  1. 1. DECISION MAKING CHAPTER No. 8
  2. 2. D ECISION M AKING <ul><li>“ Decision making is defined as the selection of a course of action from among alternatives; it is the core of planning. A plan cannot be said to exist unless decision, A commitment of resources, Direction or Reputation has been made ”. </li></ul>D EFINTION :
  3. 3. S TEPS O F D ECISION M AKING <ul><li>Analyze the whole matter. </li></ul><ul><li>Determine methods </li></ul><ul><li>Define your attitude. </li></ul><ul><li>Make decision in respect of knowledge/policy. </li></ul><ul><li>Decision according to the information. </li></ul>Decision may OR may not be 100% at every aspects
  4. 4. S TEPS of D ECISION M AKING <ul><li>The Search of Alternatives. </li></ul><ul><li>Evaluation of Alternatives. </li></ul><ul><ul><ul><li>Quantitative & Qualitative Factors </li></ul></ul></ul><ul><ul><ul><li>Marginal Analysis </li></ul></ul></ul><ul><ul><ul><li>Cost Effectiveness Analysis </li></ul></ul></ul><ul><li>Selecting an Alternative </li></ul><ul><ul><ul><li>Experience </li></ul></ul></ul><ul><ul><ul><li>Experimentation </li></ul></ul></ul><ul><ul><ul><li>Research & Analysis </li></ul></ul></ul>
  5. 5. D ECISION M AKING Selecting an Alternative Reliance on the Post How to Select from among Alternatives? Experimentation Choice Made Research & Analysis
  6. 6. Programmed & Non-Programmed Decisions D ECISION M AKING Nature of Problems Non-Programmed Decision Programmed Decision Lowest Level Highest Level Unstructured Structured Nature of Decision Making
  7. 7. D ECISION M AKING <ul><li>Decision Making Under Certainty. </li></ul><ul><li>Decision Making Uncertainty </li></ul><ul><li>Decision Making in Risk. </li></ul>
  8. 8. D ECISION M AKING M ODEL <ul><li>Decision Making Model: </li></ul>Ascertain the Need for a Decision Identify the Decision Criteria Allocate Weights to the Criteria Develop the Alternative Evaluate the Alternative Select the best Alternative
  9. 9. D ECISION M AKING <ul><li>Alternative Decision Making Models: </li></ul><ul><ul><li>The Satisfying Model. </li></ul></ul><ul><ul><ul><ul><li>A decision making model where a decision maker chooses the first solution that is good enough that is satisfactory and sufficient. </li></ul></ul></ul></ul><ul><ul><li>The Implicit Favorite Model. </li></ul></ul><ul><ul><ul><ul><li>A Decision making model where the decision maker implicitly selects a preferred alternative early in the decision process and biases the evaluation of all other choices. </li></ul></ul></ul></ul><ul><ul><li>The Intuitive Model. </li></ul></ul><ul><ul><ul><ul><li>An unconscious process created out of distilled experience. </li></ul></ul></ul></ul>
  10. 10. T HE S ATISFYING M ODEL <ul><li>A decision making model where a decision maker chooses the first solution that is “ good enough” that is satisfactory and sufficient. </li></ul>Problem Simplify Problem Set Satisfying Criteria Identify a limited set of alternatives Compare Alternatives Expand Search for Alternatives Satisfying Choice
  11. 11. T HE I MPLICIT F AVORITE M ODEL <ul><li>A Decision Making model where the decision maker implicitly selects a preferred alternatives early in the decision process and biases the evaluation of other choices. </li></ul>Ascertain the need for a decision Selection of an implicit favorite alternative Identification of alternatives Identification of confirmation candidates Confirmation of Implicit Favorite Establish decision criteria that are biased toward the favorite Selection Implicit Favorite
  12. 12. M ODERN A PPROACHES T O D ECISION M AKING <ul><li>There are three Approaches to Decision Making </li></ul><ul><li>Risk Analysis . </li></ul><ul><ul><ul><li>All intelligent decision making dealing with uncertainty like to know the size and nature of the risk they are taking in choosing of action. </li></ul></ul></ul><ul><li>Decision Trees </li></ul><ul><ul><ul><li>One of the best ways to analyze a decision is to use a so called decision tree. </li></ul></ul></ul><ul><li>Preference Theory. </li></ul><ul><ul><ul><li>Preference Theory or Utility theory is based on the notion that individual attitudes toward risk will vary. Some individual are willing to take only smaller risk than those indicated by probabilities and others are willing to take greater risks. </li></ul></ul></ul>
  13. 13. <ul><li>Evaluating the Importance of a Decision </li></ul><ul><li>Decision Support Systems </li></ul><ul><li>Creativity & Innovation </li></ul><ul><ul><ul><li>Unconscious Scanning </li></ul></ul></ul><ul><ul><ul><li>Intuition </li></ul></ul></ul><ul><ul><ul><li>Insight </li></ul></ul></ul><ul><ul><ul><li>Logical Formulation </li></ul></ul></ul>D ECISION M AKING
  14. 14. S UMMARY Decision Making is the selection of a course of action from alternatives; it is the core of planning. Because there are always alternatives, usually many to a course of action. Decision Maker need to narrow them down to those few that deal with the limiting factors.

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