Notes on Management 3 Ppt

8/14/2019 Notes on Management 3 Ppt

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NOTES ON MANAGEMENTPART 3 of 5 PARTS

THE QUANTITATIVE SCHOOL OFMANAGEMENT

Musbri Mohamed

DIL; ADIL ( ITM )

MBL ( UKM )


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Fundamentals of Decision Making

The decision making process consists of: -identifying the problem;diagnosing the situation;collecting and analyzing data relevant to the issue;ascertaining solutions that may be used in solving the problem

analyzing these alternative solutions;selecting the one that appears most likely to solve the problem; andimplementing it.
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A great deal ofsubjective as well asobjective evaluation must take place indecision making. The personal values ofthe top manager will play a significant rolein the assignment of risk and uncertaintyprobabilities. In many cases even modern

managerial decision making may well be75% subjective and 25% objective.


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The manager must be as rational as possible,drawing upon all available techniques andguidelines in choosing among the variousalternatives.

Some of the techniques that are most useful inthis process include the Laplace criterion, the

maximin criterion, the maximax criterion,marginal analysis, financial analysis and theDelphi technique. And these represent only a fewof the techniques available to the modernmanager. Modern decision making is notable forgreat variety of decision-making aids it hasdiscovered.


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Emphasis should be given to creativity anddecision making. Creative thinking has four stages:preparation, incubation, illumination and verification.There are a number of techniques that can be usedto help stimulate creative thinking. Two of the most

popular are brainstorming and the Gordon technique.Recent interest has also been generated in the areaof whole-brain thinking: teaching managers to useboth sides of their brain. Left brain thinkers are beingtaught to be more creative; right brain thinkers arebeing shown how to approach problem solving morelogically and sequentially. This latter area is

extremely important in decision making.


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Modern Quantitative Decision-MakingTools and Processes

Operations Research ( OR ) has itsdistinguishing characteristics. There are fivemain areas of concern for operationsmanagement personnel. Most of them fall

under the heading of OR. These varied incomplexity and mathematical rigor but all areof value to managers in the decision makingprocess.


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Linear Programming assists themanager in determining price-volumerelationship for effective utilization of theorganization resources. The techniquecould be employed to allocate scarceresources while simultaneously

maximizing profit.

The economic order quantity formulahelps the decision-maker determine atwhat point and in what quantitiesinventory should be replenished.


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Game theory is useful in providing the manager

with important insights into the elements ofcompetition. Sometimes this competition is bestrepresented as a zero-sum game with a saddlepoint, but more often it is typified by a nonzero sum game without a saddle point, in which case itis necessary to use a mixed strategy in solvingthe problem.

Queuing ( waiting line ) theory employsmathematical equations in balancing waiting linesand services.


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When it becomes difficult to evaluate alternativesby means of equations alone, many managers turnto the Monte Carlo technique, which uses asimulation approach and provides the decisionmaker with an opportunity to evaluate the effect ofnumerous decisions within the simulatedenvironment. On the basis of simulation results,the manager is in a position to make the decision

that best attains the objective.


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Other OR tool, and one that has been receivingincreased attention in recent years, is the decisiontree. This technique, which is less mathematicalthan those already mentioned, helps the managerweigh the alternatives based on immediate and

long run results by encouraging the individual to:( 1 ) identify the available courses of action( 2 ) assign probability estimates to the eventsassociated with the alternatives( 3 ) calculate the payoffs corresponding to eachact-event combination.


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Heuristic programming is the leastmathematical of all OR techniques, yet itis used far more often by the manager inevery day decision making (through ruleof thumb and the use of trial and error)

than any other OR tools.


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Information Systems and Decision

Making

Focus on information systems and thecomputer. Many information systemsare computerized, but this is notuniversal. Nevertheless, the two areashave one characteristic: They help

relate the departments and units of theorganization into a harmonious system.


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The primary goal of any information system

is to provide decision-making information tothe manager.

For this reason, a well-designed system must beplanned with the needs of management in mindand must follow a from-the-top-down philosophy.In addition, the system must discriminate by

organization level, providing the right kinds ofinformation to each. For example, topmanagement will need general information fromwhich to formulate strategic plans. Middlemanagement will need more specific data fordrawing up budgets, measuring and appraising

managerial performance. Lower-levelmanagement will need very specific data for usein areas such as production scheduling andinventory control.


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The modern computer is often employed aspart of an information system, providingnecessary information to managers throughoutthe hierarchy. In addition to performing bookkeeping and arithmetic functions, it is also beingused for such functions as inventory control and

airline reservations processing. Another one ofits latest applications is answering what if questions through simulation.
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Despite their great value, computers havesome important drawbacks, of whichmanagement must be aware.

First, many companies tend to buy morecomplex computers than they need.

Second, many managers place too much faithin computer printout results.

Third, many managers tend to over rate thecapabilities of the computer. There are a large

number of things people still do much betterthan any machine and qualitative decisionmaking is one of them.


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The introduction of an information systeminto an organization can bring aboutdysfunctional behavior such asaggression, projection and avoidance.


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In order to overcome the above problems,management must be willing to adopt aparticipative decision-making approach thatintroduces the new system, relates its

advantages to personnel and assures that anypersons replaced because of it will haveemployment secured for them elsewhere.


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Operations Management

We often discover what will do, by finding outwhat will not do; and probably he who nevermade a mistake never made a discovery.

Operations management is the process ofdesigning, operating and controlling a productionsystem that takes physical resources andtransforms them into goods and services. Thissystem has three basic phases: input,transformation process and output.
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At the present time there are two majoroperations management areas that are getting agreat deal of attention i.e. productivity andtechnology. Productivity is measured by theequation: output/input. The major reason thatAmerican productivity has declined vis--vis

other nations is management ineffectiveness.Too often companies have used a piecemealapproach to their productivity efforts, providedinadequate coordination among the variousdepartments, and allocated insufficientinvestment in management and supervisorytraining and development.


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Today, efforts are under way to correctthe above mistakes. Meanwhile, in thearea oftechnology, business firms areturning to robots and other state-of-the-art inventions, including supersonic

welders and lower-powered ultra sound.


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There are a number of important operations

management functions.

One is product design, which consists of planningproducts to meet customer demand. A second isproduction planning, which ties together demandforecasts with scheduled resource outputs. A thirdis purchasing and inventory control, in which

management is now making wide use of just-in-time inventory, material requirements planningand hierarchical production planning. A fourth isquality control, which many firms are pursuing bythe use of quality circles. Taken together thesefour major areas of operations research are

helping management meet the challenge for lowcost, high quality output that is being demandedby todays more informed customer.

Thank you.

Notes on Management 3 Ppt

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