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DECISION MAKING

CHAPTER No. 8

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DECISION MAKING

“Decision making is defined as the selection of a course of action from among alternatives; it is the core of planning. A plan cannot be said to exist unless decision, A commitment of resources, Direction or Reputation has been made”.

DEFINTION:

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STEPS OF DECISION MAKING

1. Analyze the whole matter.2. Determine methods3. Define your attitude.4. Make decision in respect of

knowledge/policy.5. Decision according to the

information.

Decision may OR may not be Decision may OR may not be 100% at every aspects100% at every aspects

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STEPS of DECISION MAKING

1. The Search of Alternatives.2. Evaluation of Alternatives.

1. Quantitative & Qualitative Factors2. Marginal Analysis3. Cost Effectiveness Analysis

3. Selecting an Alternative1. Experience2. Experimentation3. Research & Analysis

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DDECISIONECISION M MAKINGAKING

Selecting an Alternative

Reliance on the Post

How to Select from among Alternatives?

Experimentation

Choice Made

Research & Analysis

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DDECISIONECISION M MAKINGAKINGProgrammed & Non-Programmed Decisions

Nature of Nature of ProblemsProblems

Non-Non-Programmed Programmed DecisionDecision

Programmed Programmed DecisionDecision

Lowest LevelLowest Level

Highest LevelHighest Level

UnstructuredUnstructured

StructuredStructured

Nature of Decision Nature of Decision MakingMaking

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DDECISIONECISION M MAKINGAKING

• Decision Making Under Certainty.

• Decision Making Uncertainty

• Decision Making in Risk.

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DECISION MAKING MODEL

Decision Making Model:

Ascertain Ascertain the Need the Need

for a for a DecisionDecision

Identify the Identify the Decision Decision CriteriaCriteria

Allocate Allocate Weights to Weights to the Criteriathe Criteria

Develop the Develop the AlternativeAlternative

Evaluate Evaluate the the

AlternativeAlternative

Select the Select the best best

AlternativeAlternative

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DECISION MAKING

Alternative Decision Making Models:

The Satisfying Model. A decision making model where a decision

maker chooses the first solution that is good enough that is satisfactory and sufficient.

The Implicit Favorite Model. A Decision making model where the decision

maker implicitly selects a preferred alternative early in the decision process and biases the evaluation of all other choices.

The Intuitive Model. An unconscious process created out of distilled

experience.

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THE SATISFYING MODELA decision making model where a decision maker chooses the first

solution that is “good enough” that is satisfactory and sufficient.

Problem

Simplify Problem

Set Satisfying Criteria

Identify a limited set of alternatives

Compare Alternatives

Expand Search for Alternatives

Satisfying Choice

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THE IMPLICIT FAVORITE MODEL

A Decision Making model where the decision maker implicitly selects a preferred alternatives early in the decision process

and biases the evaluation of other choices.

Ascertain the need for a decision

Selection of an implicit favorite alternative

Identification of alternatives

Identification of confirmation candidates

Confirmation of Implicit Favorite

Establish decision criteria that are biased toward

the favorite

Selection Implicit Favorite

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MMODERNODERN A APPROACHESPPROACHES TTOO D DECISIONECISION M MAKINGAKING

There are three Approaches to Decision Making

1. Risk Analysis.All intelligent decision making dealing with uncertainty like to know the size and nature of the risk they are taking in choosing of action.

2. Decision TreesOne of the best ways to analyze a decision is to use a so called decision tree.

3. Preference Theory.Preference Theory or Utility theory is based on the notion that individual attitudes toward risk will vary. Some individual are willing to take only smaller risk than those indicated by probabilities and others are willing to take greater risks.

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1. Evaluating the Importance of a Decision

2. Decision Support Systems3. Creativity & Innovation

1. Unconscious Scanning2. Intuition3. Insight4. Logical Formulation

DDECISIONECISION M MAKINGAKING

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SSUMMARYUMMARY

Decision Making is the selection of a course of action from alternatives; it is the core of planning. Because there are always alternatives, usually many to a course of action. Decision Maker need to narrow them down to those few that deal with the limiting factors.