Managerial decision making - ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING - DR.K.BARANIDHARAN, SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI

2. Prepared by :
Dr. K. BARANIDHARAN
PROF.MBA
SRI SAIRAM INSTITUTE OF TECHNOLOGY
CHENNAI
ENGINEERING ECONOMICS
AND
FINANCIAL ACCOUNTING
Sri Sairam Institute of Technology 2

3. Engineering Economics&
Financial Accounting
Ee&fa
310 August 2014

4. Managerial decision making

5. MANAGERIAL
DECISION MAKING
Decision Making is at the heart of
organizational effectiveness,
climate, and health

6. 6
Decisions and Decision Making
• Decision = choice made from
available alternatives
• Decision Making = process of
identifying problems and
opportunities and resolving them

7. Decision making
• Decision making is an art of problem
solving.
• The process of examining your
possibilities option comparing them,
and choosing a course of action.
• Making decision is a crucial skill at
every level
--Peter Drucker--

8. Quotes
• Be sure you are right --- then go
ahead.
Davy Crocket
• Doing what’s right isn’t hard ---
knowing what’s right is.
Lyndon B Johnson
• Mine own applause is the only
applause which matters.
Cicero

9. MANAGERIAL DECISION MAKING
• Decision making is a complex process
• Decision making are more based on the goals and objectives of
the business
• Where the goals and objectives are specific and well defined,
there decision making is relatively an easy and comfortable
job.
• Decision making is the process of selection of the best
alternative from the available alternative courses of action
• Managers see decision making as the central job because they
must constantly choose
• what is to be done, who is to do it, and
• when, where and
• occasionally even how it will be done.

10. • The pros and cons of each of the alternative
course of action by which a goal can be
reached under the given circumstances.
• They must know the limitations and
constraints.
• They must have necessary information and
ability to analyze and evaluate alternative in
the light of the goal sought.
• They must have a desire to arrive at a solution
by selecting the best alternative that
satisfies the goal achievement.

11. Importance of Decision Making
• The managerial decision problem may have
several alternative solutions. The decision may
pertain to any of the following: example:
problems
• Whether to manufacture product A or Product B
• Whether to acquire machine X or machine Y
• Whether to promote employee X or employee Y
to the higher position in the organization.
• Whether to drop product X and in its place
introduce a new product Z

12. • Every firm faces managerial decision
problems and every firm may find
several alternatives solutions available.
• The firm should identify the alternatives
available, collect the necessary
information, evaluate each alternative
carefully based on the available
information and rank the alternatives in
order and choose the best alternative
among the available alternatives.

13. 6’Cs
• Construct a clear picture of
precisely what must be decided
• Compile a list of requirements
that must be met
• Collect information on
alternatives that meet the
requirements

14. • Compare alternatives that meet
the requirements.
• Consider “what might go
wrong” factor with each
alternative.
• Commit to a decision and follow
through with it