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PRESENTATION ON DECISION MAKING MODULES GROUP WORK SUE
- 1. PUBLIC MANAGEMENT PRESENTATION DECISION MAKING MODULES AND TECHNIQUES Presented by : Group 6 Unathi, Rethabile, Sindi, Sue and Sihle
- 2. Background of Decision making Models and Techniques Critical discussion on Various Decision making modules with Examples Discussion on Quantitative Tools and Techniques in Decision making. Considering Environmental Factors in Decision making Questions and Answers PRESENTATION OUTLINE:
- 3. WHAT DO YOU SEE…
- 4. WHAT IS YOUR DECISION
- 5. DECISION MAKING DEFINING DECISION MAKING: Decision making is universally defined as choosing between alternatives. OR…
- 6. DECISION MAKING • “The process of examining your possibilities options, comparing them, and choosing a course of action”… • Examples would be: A Holiday Destination/ New Shoes/ New House/ New Car/ New Bill/Law to be passed.. etc..
- 7. Factors in Effective Decision Making Perception. Priority. Acceptability. Risk. Resources. Goals. Values/Morals. Demands. Style. Judgment Vision/Mission
- 8. Six c‘s of Decision Making Construct. Compile. Collect. Compare. Consider. Commit.
- 9. The Decision-Making Process –A set of steps that include identifying a problem, selecting an alternative, and evaluating the decision’s effectiveness. 1. Identifying a problem/ (Opportunity)- “My Sales reps need new Computers” 2. Identifying decision criteria- Memory and Storage, Display quality, Better life, Warranty, Carrying Weight
- 10. Contd… 4. Developing alternatives-Toshiba, SonyVaio, Dell, Lenovo,HP, etc 5. Analyzing alternatives- Toshiba, Sony Vaio, Dell, Lenovo, HP, 6. Selecting the best alternative 7. Implementing the alternative- e.g Toshiba 8. Evaluating decision effectiveness- How well does the Toshiba work under required capacities.
- 11. DECISION MAKING MODELS • There are several models of decision-making: • The Rational/Classical model • The Social Model
- 12. Cont… • Simon’s bounded rationality model/Administrative Man Model • Retrospective decision model (implicit favourite model):
- 13. Quantitative Techniques and Tools • In a world of decision making, very few decisions are ever made without a specific method utilised. We would look at one of the many called Quantitative Techniques in decision making. Knowledge of quantitative methods and their techniques is an indispensable aid in the hands of a decision maker.
- 14. Its about…Techniques • These are the quantitative techniques that we will look at: Regression and Correlation Analysis Probability Theory Decision Making Linear Programming
- 15. Cont… Integer Programming Network Analysis Queuing Theory Simulation Learning Curves • We will look at these briefly:
- 16. Cont… Quantitative Techniques Description Regression and Correlation A Forecasting method to which a model is formulated by means of statistical process Probability Theory Due to information that is not 100% correct, the probability theory and statistics are aids within quantitative techniques to which historical accounting and data can be processed and served in such a manner as to serve as a forecasting method. Study of obesity in children from the age of 5. Linear Programming Mathematical technique to determine the optimal utilization of limited resources. Linear Programming can be utilised to assist in decision making, Following these procedures: = Determine the objectives = Identify constraints and formulate these in the form of a linear equation and = decide on a suitable method going forward
- 17. Cont.. Linear Programming Mathematical technique to determine the optimal utilization of limited resources. Linear Programming can be utilised to assist in decision making, Following these procedures: = Determine the objectives = Identify constraints and formulate these in the form of a linear equation and = decide on a suitable method going forward Integer Programming A mathematical programming that yields integer solutions of the linear programming problems where certain decision variables need to have integer values in the same optimal solution within the technique of integer programming. Network Analysis This is a quantitative method which can be used for the analysis of a large variety of decision making problems and the selection of optimal alternatives. Although used in the planning of projects, it can also be applied to decision making.
- 18. Cont.. Queuing Theory This is enabled to achieve a healthy balance so that the waiting period is not too long and service costs are not too high. It also evaluates the effectiveness of a particular queuing structure. Simulation Every day phenomenon applied in various fields.it is easy to use and can be applied in cases where it’s impossible to solve mathematically. Experiments with every day decisions. E.g New Model cars, prototypes. Learning Curve Makes forecasts thus enhancing the quality of planning and decisions. Quantitive technique used for calculating perceptible and predictable reduction in the time required to carry out the same task repetitively.
- 20. Environmental Factors • An identifiable element in the physical, cultural, demographic, economic, political, regulatory, or technological environment that affects the survival, operations, and growth of an organization.
- 21. Theseare… Environmental issues are the external factors that affect an organisation. The types of external factors that can have an effect on decision making include: • The market in which the organisation operates • The economy • Government legislation • Customers' reaction to the organisation's products and services
- 23. Cont… – Personal Demographics: age, gender, stages in life cycle, education, occupation, economic position, etc. – Personal psychographics: includes lifestyle, attitudes, self-concept, concern about status, value systems, beliefs etc. – Culture: combined resulted of factors like religion, traditions, taboos, language, education, upbringing, established pattern of social behaviour, values (core & secondary)etc. – Sub culture: caste – Social class: it is determined by the education level, wealth, occupation, profession & designation, location of residence, values, and behaviour of its members
- 24. To consider… – Intimate groups: e.g. family, friends, peer groups, close colleagues & close-knit organisations. • Face-to-face & frequent interactions are characteristic feature of the group. – Secondary groups(including Opinion leaders): based on occupation, profession place of residence, etc., of the members. • O.L has the high credibility & influence • - Information, should be authentic, reliable, adequate and must be available at time. So enough time must be there to analyse the problem. • It reduces the uncertainty. • Too much information or information over-load creates confusion & delay in decision making.
- 25. Thank you • “Doing what's right isn't hard -- Knowing what's right is.” Lyndon B. Johnson. Thank You.
Editor's Notes
- 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. Compare alternatives that meet the requirements. Consider the "what might go wrong" factor with each alternative. Commit to a decision and follow through with it.
- Finding a discrepancy (difference) between an existing (current) and a desired state of affairs (things are not going as they should). Three Characteristics (aspects) of Problems. (Step 1) A problem is identified when: A manager becomes aware (conscious) of it. There is pressure to act and solve the problem. The resources needed to take action are available (means, authority, information). Questions to ask is: Is the Problem a pressing one or a dispensible one ( this will determine the model of action taken) Is the “problem really a symptom masking the underlying problem or a root cause that contributes to actual problems Is the problem sui generis (latin) (ONE OF A KIND) OR generic (one of a family of quite similar problems) Managers must determine and list the relevant criteria the problem identified in step 1. Step 2: Identify decision criteria: Costs that will be incurred Risks likely to be encountered Outcomes that are desired Prioritizing the criteria that were identified in step 2 by assigning a “weight” to each. Step 3: Decision criteria are not of equal importance Assigning a weight to each item places the items in the correct priority in the decision making process.
- Listing viable alternatives that could resolve the problem. Step 4: Developing Alternatives -Alternatives are only listed without evaluation. Appraising each alternative’s strengths and weaknesses against the criteria established in steps 2 and 3. Step 5: Analyzing alternatives -Alternatives are analyzed for their effectiveness in resolving the issue Choosing the best Alternative Step 6: Make A Informed choice Choosing the best alternative from among those considered. Implementing the alternative Step 7:Putting the chosen alternative into action. Conveying the decision to those who will implement it and gaining their commitment to the decision. Evaluating the outcome of the decision to see if the problem has been resolved. Step 8: The soundness of the decision is judged by its outcomes. How effectively was the problem solved resulting from the chosen alternatives? If the problem was not solved, what went wrong?
- The Rational/Classical model is the first attempt to know the decision-making-process. It is considered by some as the classical approach to understand the decision-making process. The classical model gave various steps in decision-making process which have been discussed earlier. Features of Rational/Classical Model: 1. Problems are clear. 2. Objectives are clear. 3. People agree on criteria and weights. 4. All alternatives are known. 5. All consequences can be anticipated. 6. Decision makes are rational. i. They are not biased in recognizing problems. ii. They are capable of processing ail relevant information iii. They anticipate present and future consequences of decisions. iv. They search for all alternatives that maximizes the desired results. The Social Model: At the opposite extreme from the Classical/Rationality model is the Social model drawn from psychology. Sigmund Freud viewed humans as bundles of feelings, emotions and instincts, with their behaviour guided by their unconscious desires. These processes have even an impact in the international arena as they provide some basic rules of protocol.
- Bounded Rationality Model or Administrative Man Model Decision-making involve the achievement of a goal. Rationality demands that the decision-maker should properly understand the alternative courses of action for reaching the goals. He should also have full information and the ability to analyse properly various alternative courses of action in the light of goals sought. There should also be a desire to select the best solutions by selecting the alternative which will satisfy the goal achievement. Herbert A. Simon defines rationality in terms of objective and intelligent action. It is characterised by behavioural nexus between ends and means. If appropriate means are chosen to reach desired ends the decision is rational. Bounded Rationality model is based on the concept developed by Herbert Simon. This model does not assume individual rationality in the decision process. Instead, it assumes that people, while they may seek the best solution, normally settle for much less, because the decisions they confront typically demand greater information, time, processing capabilities than they possess. They settle for “bounded rationality or limited rationality in decisions. This model is based on certain basic concepts. Sequential Attention to alternative solution: Normally it is the tendency for people to examine possible solution one at a time instead of identifying all possible solutions and stop searching once an acceptable (though not necessarily the best) solution is found. b. Heuristic: These are the assumptions that guide the search for alternatives into areas that have a high probability for yielding success. c. Satisficing: Herbert Simon called this “satisficing” that is picking a course of action that is satisfactory or “good enough” under the circumstances. It is the tendency for decision makers to accept the first alternative that meets their minimally acceptable requirements rather than pushing them further for an alternative that produces the best results. Satisficing is preferred for decisions of small significance when time is the major constraint or where most of the alternatives are essentially similar. Thus, while the rational or classic model indicates how decisions should be made (i.e. it works as a prescriptive model), it falls somewhat short concerning how decisions are actually made (i.e. as a descriptive model). Retrospective decision model (implicit favourite model): This decision-making model focuses on how decision-makers attempt to rationalise their choices after they have been made and try to justify their decisions. This model has been developed by Per Soelberg. He made an observation regarding the job choice processes of graduating business students and noted that, in many cases, the students identified implicit favourites (i.e. the alternative they wanted) very early in the recruiting and choice process. However, students continued their search for additional alternatives and quickly selected the best alternative. The total process is designed to justify, through the guise of scientific rigor, a decision that has already been made intuitively. By this means, the individual becomes convinced that he or she is acting rationally and taking a logical, reasoned decision on an important topic.