This document discusses decision making and the decision making process. It describes two main types of decisions - programmed decisions which are routine and non-programmed decisions which are unique. The decision making process involves 8 steps - defining the problem, identifying criteria, allocating weights, developing alternatives, analyzing alternatives, selecting an alternative, implementing it, and evaluating its effectiveness. Various factors that influence decision making are also outlined such as types of problems, decision conditions involving certainty, risk and uncertainty, and types of decision makers.

1. Decision Making
An essence to problem solving
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2. Decision Making
• ― the process of responding to a problem by searching
and selecting a solution or course of action‖.
• There are basically two kinds of decision that are called
upon to make:
Programmed and non-programmed
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3. Types of Problems and Decisions
• Structured problems
* Involve clear goals.
*Are familiar (have occurred
before)
*Are easily and completely
defined- information about the
problem is available and complete.
• Programmed decision
*A repetitive decision the can be handled by a
routine approach.
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4. • Unstructured problems
* Problems that are new or unusual and for which
information is ambiguous or incomplete.
* Problems that will require custom-made
solutions.
• Non-programmed decisions
* Decision that are unique and non-recurring.
* Decision that generate unique responses.
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5. Vitals of Decision making process
• Policy
• a general guideline for making a decision about a
problem.
• Procedure
* A series of interrelated steps that decision maker
can use to respond ( applying a policy) to a problem.
• Rule
* an explicit statement that limits what can or cannot
be done.
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6. The Decision-
Making Process
Define the Evaluate Implement the
Problem Alternatives chosen Alternative
Gather facts and Select the best Follow up and
develop alternative. evaluate the chosen
alternatives. alternative.
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7. Decision Making Process
• Identifying Problem
• Identifying Decision Criteria
• Allocating Weights to the Criteria
• Developing Alternatives
• Analyzing Alternatives
• Select Alternatives.
• Implement Alternatives.
• Evaluating decision’s effectiveness.
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8. Step 1: Identifying the Problem
* A problem becomes a problem when
someone becomes aware of it.
* there is always a pressure to solve the
problem.
* the person must have the
authority, information, or resources
needed to solve the problem.
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9. Step 2: Identify the Decision Criteria
• Decision criteria are factors that are
important ( relevant) to resolving the
problem.
* Costs that will be incurred (investment
required).
* Risks likely to be encountered ( chance
of failure).
* Outcomes that are desired ( growth of
the firm).
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10. Step 3: Allocating Weights to the
Criteria
• Decision criteria is of equal importance:
* Assigning a weight to each item.
* Places the items in the correct priority
order of their importance in the decision
making process.
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11. Step 4: Developing Alternatives
• Identifying viable alternatives.
* Alternatives are listed ( without
evaluation) that can resolve the problem.
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12. Step 5 :Analyzing alternatives
• Appraising each alternative’s
strengths and weaknesses
* An alternative’s appraisal is based
on its ability to resolve the issues
identified
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13. Step 6: Selecting the alternative
• Choosing the best
alternative
* The alternative with the
highest total weight is chosen.
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14. Step 7: Implementing the
Alternative
• Putting the decision to and gaining
comment from those whose will carry
out the decision.
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15. Step 8: Evaluating the decision’s
effectiveness
• The soundness of the decision
is judged by its outcomes.
* How effectively was the problem
resolved by outcomes resulting from
the chosen alternatives?
* if the problem was not resolve, what
went wrong?
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16. Intuition
* It is making decisions on the
basis of experience, feelings, and
accumulated judgment.
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17. Decision Making Conditions
• Certainty
* A situation in which someone can make
an accurate decision because the
outcome of every alternative choice is
known.
• Risk
* A situation in which the someone is able
to estimate the likelihood (probability) of
outcomes that result from the choice of
particular alternatives.
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18. • Uncertainty
* limited information prevents estimation of
outcome probabilities for alternatives
associated with the problem and may force to
rely on intuition, hunches, and ―gut feelings‖.
# Maximax: The optimistic person’s choice to
maximize the maximum outcome.
# Maximin: The pessimistic person’s choice to
maximize the minimum outcome.
# Minimax: The choice to minimize maximum
regret.
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19. Types of Decision Makers
* Directive
# Use minimal information and consider few
alternatives.
* Analytic
# Make careful decisions in unique situations.
* Conceptual
# Maintain a broad outlook and consider many
alternatives in making decisions.
* Behavioral
# Avoid conflict by working well with others and
being receptive to suggestions.
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20. Rational (Logical) Decision Model
Steps
Scanning the situation—identifying a signal that a
decision should be made.
Classify the decision as routine, apply the
appropriate decision rule; as non-
programmed, begin comprehensive problem
solving.
Monitor and follow-up as necessary.
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21. Trends in Decision Making
– The pace of decision
making is accelerating:
more decisions to make
and have less time to make them.
• Complex streams of decisions
• Sources of decision complexity
• Perceptual and behavioral decision traps
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22. Dealing with Complex Streams
of Decisions
– Multiple criteria to be satisfied by a decision.
– Intangibles that often determine decision
alternatives.
– Risk and uncertainty about decision alternatives.
– Long-term implications of the effects of the
choice of a particular alternative.
– Interdisciplinary input increases the number of
persons to be consulted before a decision is made.
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23. – Pooled decision making increases the
number of persons playing a part in the decision
process.
– Value judgments by differing participants
in the process create disagreement over
whether a decision is right or wrong, good or
bad, and ethical or unethical.
– Unintended consequences occur because
the results of purposeful actions cannot always
be predicted.
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24. Guidelines for effective
decision making
 Categorical interpretation- the problem should be
defined properly.
 Application of limiting factor- limiting factor
should be taken into account in order to analyze
 Adequate information- more quantity of reliable
information leads to effective decision making.
 Considering other views- various views at the
same point are taken into account for quality
decision.
 Timeliness- decision should be ,made at proper
time to meet the competitive advantages.
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25. Techniques improving decision
making
 Brainstorming – idea generation for decision
making.
 Nominal group technique (NGT)- problem
outlined, presentation of solution in written
form, discussion over written solutions, and final
decision.
 Delphi technique- decision made on the basis of
questionnaire filled by the respondents.
 Consensus mapping- decision made on the basis
of the report presented by the representative of
each group after Page 25

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