Decision making

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Decision making

  1. 1. DECISION MAKING <ul><li>Is the selection of course of action from two or more alternatives, the decision making process is a sequence of steps leading to that selection </li></ul>
  2. 2. NATURE <ul><li>It is a goal – oriented process, continuous, systematic process </li></ul><ul><li>It is a intellectual process and situational </li></ul><ul><li>It involves commitment of resources. </li></ul>
  3. 3. RATIONALITY IN DECISION MAKING <ul><li>Models of decision making </li></ul><ul><li>Economic man model </li></ul><ul><li>Administrative man model </li></ul>
  4. 4. Economic man model <ul><li>Adam smith </li></ul><ul><li>Fully rational or logical when making work related decisions </li></ul><ul><ul><li>Full idea of problem </li></ul></ul><ul><ul><li>Formulates his goals consciously </li></ul></ul><ul><ul><li>Scientific thinking </li></ul></ul><ul><ul><li>Knowledgeable and analyses information intelligently </li></ul></ul><ul><li>An OPTIMAL DECISION which maximizes return / minimize cost </li></ul>
  5. 5. Administrative man model <ul><li>Herbert Simon </li></ul><ul><ul><li>Economic man model is narrative </li></ul></ul><ul><li>Describe how a manager should make decisions </li></ul><ul><li>Managers rarely behave in scientific manner </li></ul>
  6. 6. Practical problems Bounded Rationality <ul><li>No scientific way of and identifying and analyzing novel and unstructured problems </li></ul><ul><li>Not possible to formulate explicit goals (vague assumptions mixed with personal values) goals become distorted </li></ul><ul><li>Lack of complete information </li></ul><ul><li>Limited skill of manager </li></ul><ul><li>Lack of time for exhaustive search </li></ul><ul><li>Environment is uncertain, complex, probabilistic rather than deterministic </li></ul><ul><li>Organizational constraints do not allow complete rationality forces of stability, continuity often prevail upon forces of change & challenge </li></ul><ul><li>Decision both influenced by both reason and emotions </li></ul><ul><li>Manager content when decision which do not make undue demand on times talent </li></ul>
  7. 7. TYPES OF DECISION MAKING <ul><li>Programmed decisions </li></ul><ul><li>Non-programmed decisions </li></ul><ul><li>Strategic decisions </li></ul><ul><li>Tactical decisions </li></ul><ul><li>Operating decisions </li></ul><ul><li>Procedure </li></ul><ul><li>Rules </li></ul><ul><li>Programs </li></ul><ul><li>Budgets </li></ul><ul><li>Schedules </li></ul><ul><li>Projects </li></ul>
  8. 8. Steps in Decision Making Identification of problem Diagnosing the problem Collect and analyze the relevant information Alternative course of action Analyzing the alternative Select best alternative implementation

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