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  1. 1. Managing Engineering and Technology Third Edition Babcock and Morse <ul><li>Decision Making </li></ul><ul><li>Chapter 4 </li></ul>
  2. 2. Advanced Organizer
  3. 3. Chapter Objectives <ul><li>Explain the process of management science </li></ul><ul><li>Be able to solve problems using three types of decision making tools </li></ul>
  4. 4. Relation to Planning <ul><li>Managerial decision making is the process of making a conscious choice between two or more rational alternatives </li></ul>
  5. 5. Management Science Characteristics <ul><li>Systems view of the problem </li></ul><ul><li>Team approach </li></ul><ul><li>Emphasis on use of formal mathematical models and statistical and quantitative techniques </li></ul>
  6. 6. Management Science Process <ul><li>Formulate the Problem </li></ul><ul><ul><li>Construct a Mathematical Model </li></ul></ul><ul><ul><li>Test the Model </li></ul></ul><ul><ul><li>Derive a Solution from the Model </li></ul></ul><ul><li>Apply the Model’s Solution to the Real System </li></ul>
  7. 7. Categories of Decision Making Tools <ul><li>Certainty </li></ul><ul><li>Risk </li></ul><ul><li>Uncertainty </li></ul>
  8. 8. Decision Making Certainty <ul><li>Linear Programming One of best known tools of Management Science </li></ul><ul><li>Used to determine optimal allocation of an organization’s limited resources </li></ul>
  9. 9. Linear Programming <ul><li>State the problem </li></ul><ul><li>Decision Variables </li></ul><ul><li>Objective function </li></ul><ul><li>Constraints </li></ul>
  10. 10. Decision Making Under Risk <ul><li>Expected Value </li></ul><ul><li>Decision Trees </li></ul><ul><li>Queuing </li></ul><ul><li>Simulation </li></ul>
  11. 11. Decision Making Uncertainty <ul><li>Maximax </li></ul><ul><li>Maximin </li></ul><ul><li>Hurwicz </li></ul><ul><li>Equally likely </li></ul>
  12. 12. Computer-Based Information Systems <ul><li>Integrated Data Bases </li></ul><ul><li>Management Information/Decision Support Systems </li></ul><ul><li>Expert Systems </li></ul>