This document discusses various aspects of decision making. It defines decision making as a central management activity that involves judgment. It outlines the decision making process as identifying a problem, criteria, alternatives, selecting an alternative, and implementing and evaluating it. It categorizes decisions as programmed, which are routine, or non-programmed, which are novel and complex. It also discusses rational and bounded rational models of decision making and notes group decisions are needed for sensitive, high cost, high risk, or strategic issues.

1. Decision
Making

2. Index
 What is Decision Making?
 The Significance of Decision Making
 Decision-making Process
 Decision Making Model
 Categories of Decisions
 Group Decision-making

3. What is decision-making?
 The central activities of management and is a huge part of any process
of implementation
 A decision is a judgment

4. • The one truly distinctive characteristic of managers
The Significance of Decision Making
• Decisions made by top managers commit the total organization toward
particular courses of action
• Decisions made by lower levels of management implement the strategic
decisions of top managers in the operating areas of the organization
• Decisions invariably involve organizational change and the commitment of
scarce resources

5. Decision-making
Process
Identifying a problem
Identifying decision criteria
Allocating weights to criteria
Analyzing alternatives
Selecting an alternative
Implementing the alternative
Evaluation (of decision effectiveness)

6. Categories of Decisions
Programmed Decisions:
• A decision that is repetitive and routine
• A definite method for its solution can be established
• Does not have to be treated a new each time it occurs
• Procedures are often already laid out
Examples: pricing, standard customer orders, determining billing
dates

7. Non-programmed Decisions:
• A decision that is novel (new or unique)
• No established methods exist, because it has never occurred before
• It is too complex
• Are “tough” decisions that involve risk and uncertainty
Examples: Moving into a new market

8. Decision Making Model
Rational Model: Assumptions
• Clear and unambiguous problem
• Single, well-defined goal
• All alternatives are known
• Clear preferences
• No time or cost constraints

9. Rational Model: Criticism
• Not all decisions made on rational basis
• Most problems, goals and preferences are not clear or well defined
• Not practical to know all possible alternatives
• Time and cost constraints exist in all practical problems

10. Bounded Rational Model: Assumptions
• Limited set of criteria
• Self-interest influences ratings
• Self-interest influences ratings
• Alternatives are assessed one at a time till a satisficing (or good
enough) alternative is found

11. The factors requiring group decisions include:
Group Decision-making
• Involving sensitive issues
• High cost alternatives
• Involving very high risk factor
• Strategic impact