1. Chapter 4 Foundations of Decision Making

4. Identify Problem The Decision-Making Process Select Alternative Implement Alternative Evaluate Results 1 Develop Alternatives Analyze Alternatives Develop Decision Criteria Allocate Weights to Criteria 2 3 4 5 6 7 8

5. Step 1: Identify a Problem The difference between what is and what it ought to be

8. Problem: To purchase a new car 1 Handling 3 Performance 5 Repair record 5 Durability 8 Interior comfort 10 Price Weight Criterion

9. Step 4: Alternatives Generate a list of possible vehicle manufacturers

11. Concluding Steps in Making a Decision Step 6: Select the “best” Step 7: Implement decision Step 8: Evaluate decision

12. Assumptions Of Rationality Rational Decision Making Problem is clear and unambiguous Single, well- defined goal is to be achieved All alternatives and consequences are known Preferences are clear Preferences are constant and stable No time or cost constraints exist Final choice will maximize payoff © Prentice Hall, 2002 Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc. FOM 4.12

19. Programmed Decision Procedure Rule Policy

20. Relationship of Problems, Decisions, and Level Programmed Decisions Non-programmed Decisions Type of Problem Level Ill-Structured Well-Structured Top Lower

22. Decision-Making Styles Analytical Behavioural Directive Conceptual Rational Intuitive Way of Thinking Low High Tolerance for Ambiguity Source: S. P. Robbins, Supervision Today (Upper Saddle River, NJ: Prentice Hall, 1995), page 111.