Decision making involves selecting from two or more alternatives based on criteria. It is affected by the business environment, needs, employee involvement, and individual psychology. The decision making process analyzes problems, considers available alternatives, and selects the best option based on circumstances and purpose. Principles of decision making include marginal theory of diminishing returns, mathematical theories like game theory, psychological factors of the decision maker, evaluating all alternatives, limiting decisions based on constraints like time and cost, and allowing employee participation.

1. DECISION MAKING
Definitions,Elements,Process,Principles

2. What is Decision-Making??
According to George R Terry
“Decision Making is the selection based
on some criteria from two or more
possible alternatives”

3. Elements of Decision-Making
A decision is taken according to the environment of
business
Decisions are taken when they are needed
Employees are also involved in Decision-Making
Psychology of an individual is involved in Decision-
Making
Best decision-making requires
intelligence,experience,and insight into a problem
A problem is fully analysed and available alternatives
are considered before taking decisions
Centralisation and Decentralisation of authority affect
decision making indirectly

4. Process of Decision-Making

5. Principles of Decision-Making

6. 1.Marginal theory of decision-making
Here the manager adopts the
principle of law of diminishing returns.
For instance, a toy manufacturer
should only produce toys until marginal
expense is equal to marginal benefit. By
breaking down decisions into
measurable, smaller pieces, the toy
manager can optimize profits

7. 2.Mathematical theory in
decision-making
Mathematical theory gives scientific
approach to manager while taking
decisions. Venture theory, game theory,
probability theory and waiting theory are
some of the mathematical theories

8. 3.Psychological Theory
A manager takes a decision on the basics
of his aspiration, technological
skill,personality,social status and
organisation status. Though the manager
is expected to take decision confined to
the scope of his responsibility and
authority, there is an impact of
psychology over the decision

9. 4.Principle of Alternatives
Decision is a selection process. All the
alternatives are evaluated and screened in
the order of their usefulness.Finbally the
best alter-native is selected according to
the circumstances of the purpose

10. 5.Principle of limiting Factors
The fundamentals of a problem are studied.
An reference or conclusion is drawn on the
basics of study. The manager takes a
decision with the help of conclusion or
interference. The decision may be based on
a limiting factor. The limiting factor may be
time, cost or resources Decision are
supposed to be good and the limiting factor
is considered while taking a decision

11. 6.Principle of Participation
This principle is based on human behaviour
and human relationship. Each and every
person wants to be treated as an important
person. So the management may allow
employees to have a say in the process of
decision making