This document discusses different types of decision making processes. It defines decision making as choosing the best alternative to reach objectives. There are several types of decisions discussed - programmed decisions which are routine, rational decisions which follow a multi-step process of intelligence, design, choice and implementation, bounded rationality decisions which are made with constraints, and non-programmed decisions which are novel with no set rules. The document also outlines the typical steps in a general decision making process as recognizing the need, framing the problem, generating and assessing alternatives, choosing among alternatives, implementing, and learning from feedback.

1. Organization of Decision Making
Hamza Amjad
Department of Economics
Presented By

2. What is Decision Making?
• Decision making is the process of choosing the
best alternative for reaching objectives.
• Decision making is the act of choosing one
alternative from among a set of alternative.

3. Decision-Making Process
• Sometime effective decision must be
made to:
• Optimize some set of factors such
as profit, sales, employee welfare
and market share or
• Minimize loss, expenses or employ-
yee turnover.

4. Types of Decision
• Programmed Decision
• Rational Decision
• Bounded Rationality Decision
• Non-Programmed Decision

5. Programmed Decision
• Programmed decision straight-forward,
mundane, and less thoughtful everyday
decisions.
• Decision on the kind of clothes to wear,
food to eat daily, including recurring
customers’ complaints are example of
such decision.

6. Rational Decision
• Rational decision involves series of steps
decision maker would consider if goal of such
decisions is to maximize the decision’s
outcomes.
• Ideal method for how managers should make
decision.

7. The Rational Decision Making Process
Intelligence
identify problems &
opportunities
define objectives &
criteria for success
Design
develop and evaluate
alternatives
Choice
prioritize and select one
or more alternatives
Implement and
evaluate
implement the choice
and monitor success

8. Bounded Rationality Decision
• How decision are made under severe time and
resource constraints.
• Helps manager in their decision making
process to limit their search in a manageable
way for alternatives.

9. Non-Programmed Decision
• Nonroutine decision made in response to
unusual or novel opportunities and threats.
• The are no rules to follow since the decision is
new.

10. Decision Making Steps
1. Recognize need for a decision:
Manager must first realize the need for which a decision
must be made.
2. Frame the problem:
Manager must frame problem for which decision is to be
made.
3. Generate & assess alternatives:
Manager must develop feasible alternative courses of
action.
Evaluate alternatives: what are the advantages and
disadvantages of each alternative.

11. 4. Choose among alternatives:
Managers rank alternatives and decide.
– While ranking, all information needs to be
considered.
5. Implement choose alternative:
Managers must now carry out the alternative.
– Often a decision is made and not implemented.
6. Learn from feedback:
Without feedback manager never learn from
experience and might repeat the same mistake.