2. Decision Process.
• The simplistic view of decision making is choosing
among alternatives.
• But decision making is a process and not just choosing
among the alternatives.
• The steps involved in decision making process are 8
(eight). They are ..
• Identify a problem( Discrepancy between an existing and
desired state of affairs).
• Well structured problems are straight forward, familiar,
easily defined, ill structured problems are new having
ambiguous & incomplete information.
• Identify decision criteria.(Relevant Factors)
3. • Allocate weights to Criteria.( on 1 to 10
scale)
• Develop Alternatives.
• Analyse Alternatives.
• Select an Alternative.
• Implement the Alternative.
• Evaluate decision effectiveness.
4. Rational Decision Making Model.
• The Problem is clear and unambiguous.
• A 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 maximise ( economic) payoff
5. • Herbert Simon recognised that decisions
typically do not follow the assumption of
rationality. But that wasn’t an indictment of
the model itself. Although environmental
factors may act as barriers to these
assumptions, decision makers can still act
rationally but in a constrained way which
he called as BOUNDED RATIONALITY.
6. • Bounded Rationality is the behaviour that
is rational within the parameters of a
simplified model that captures the
essential features of a problem.
7. Certainty, Risk & Uncertainty
• Certainty implies that the manager can make an
accurate decision because the outcome of every
alternative is known.
• But that is not always the case, risk involves
assigning probabilities to outcomes that may
result.
• When decision makers have no full knowledge
of the problem nor the reasonable probability of
outcome they make decision under a condition
of Uncertainty.
8. Decisions & Organisational Levels.
• Types of Problems Mgt Level
• Well Structured Middle/ Lower.
• Unstructured Top.
• ------------------------------------------------------
• Types of Decisions Mgt Level.
• Programmed Middle/ Lower.
• Non Programmed Top
9. Decision Making Styles.
• Directive Style. Low tolerance for
ambiguity and rational way of thinking.
• Analytic Style. High tolerance for
ambiguity and rational way of thinking.
• Conceptual Style. A very broad outlook
and a tendency to look at many
alternatives
• Behavioral Style. Intuitive thinking and
low tolerance for uncertainty.
10. Group Decision Making.
• Advantage.
• More complete information, more
alternatives, increased acceptance of
solutions and greater legitimacy.
• Disadvantages.
• Time consuming, minority dominance,
pressure for conformance.