1

D E C I S I O N M A K I N G

DECISION MAKING IS A PART OF

EVERYDAY LIFE

MAKING DECISIONS IS

PRIMARY RESPONSIBILITY OF MANAGERS

2

DECISIONS INVOLVE :

ALLOCATING RESOURCES

APPOINTING PEOPLE

INVESTING CAPITAL

INTRODUCING NEW

PRODUCTS

BECAUSE MEN / MONEY / MACHINES / MATERIALS / TIME / SPACE ARE NOT

ABUNDANT

NEED FOR PLANNING ACTIVITIES

3

D E C I S I O N M A K I N G

I S P R O C E S S O F C H O O S I N G

B E T W E E N

A L T E R N A T I V E S

T O A C H I E V E A

G O A L

D E C I S I O N M A K I N G I S A T T H EC O R E O F A L L P L A N N E D

A C T I V I T I E S

4

TIME FRAMEWORK OF DECISION MAKING

PAST : WHEN PROBLEM DEVELOPED/ INFORMATION ACCUMULATED / NEED FOR DECISION FELT

PRESENT : WHEN ALTERNATIVES ARE DEVELOPED/ CHOICE IS MADE

FUTURE : WHEN DECISIONS WILL BE EXECUTED/ EVALUATED DECISION MAKING IS A DYNAMIC PROCESS WITH CONSTANT FEEDBACK

5

CLASSIFICATION OF DECISIONS

PERSONAL & ORGANISATIONAL DECISIONS

BASIC & ROUTINE DECISIONS

PROGRAMED & NONPROGRAMED DECISIONS

PERSONAL : CANNOT BE ORDINARILY DELEGATED TO OTHERS ORGANISATIONAL : CAN OFTEN / ALWAYS BE DELEGATED

BASIC : ONE TIME / UNIQUE - LONG RANGE COMMITMENTS OF RELATIVE PERMANENCE

ROUTINE : EVERYDAY HIGHLY REPITITIVE -- LITTLE IMPACT

PROGRAMED : HANDLED THRU STRUCTURED BUREAUCRATIC TECHNIQUES -- STANDARD OPERATING PROCEDURES

NON PROGRAMED : MADE BY USING AVAILABLE INFORMATION & ONES

OWN JUDGEMENT -- UNDER PRESSURE OF SAYTIME GRESHAMS LAW OF PLANNING : THERE IS A GENERAL TENDENCY FOR

PROGRAMED ACTIVITIES TO OVERSHADOW NONPROGRAMED ACTIVITIES

6

TYPES OF MANAGERIAL DECISIONS

----------------------------------------------------------------------------------------------------------------------------------- JUDGEMENTAL DECISION ADAPTIVE DECISION

MARKETING/ INVESTMENT/PERSONNEL R&D/ LONGTERM CORP PLNG MECHANISTIC DECISION ANALYTICAL DECISION

DAILY /ROUTINE / SCHEDULED COMPLEX PRODN/ENGG PROBLEMS ------------------------------------------------------------------------------------------------------------------------------------

LOW PROBLEM COMPLEXITY HIGH MECHANISTIC DECISIONS : ROUTINE & REPITITIVE IN NATURE

LIMITED DECISION VARIABLES BUT OUT COME OF EACH ALTERNATIVE IS KNOWN STANDARD OPTG PROCEDURES/ HABITUAL RESPONSES / CLERICAL ROUTINES

JUDGEMENTAL DECISIONS : LIMITED NO OF DECISION VARIABLES

ALTERNATIVE OUTCOMES UNKNOWN MARKETING/ INVESTMENT/ RESOURCE ALLOCATION PROBLEMS GOOD JUDGEMENT NEEDED TO MAXIMISE DESIRED OUTCOMES

7

ANALYTICAL DECISIONS : LARGE NO OF DECISION VARIABLES OUTCOME OF EACH CAN BE COMPUTED

COMPLEX PRODUCTION/ENGINEERING

LINEAR PROG/QUEING THEORY/STATISTICAL ANALYSIS METHODS ARE USED

ADAPTIVE DECISIONS : LARGE NO OF DECISION VARIABLES

OUTCOMES NOT PREDICTABLE ILL STRUCTURED PROBLEMS NEED

DIVERESE TECH BACKGROUND SUPPORT FREQUENT MODIFICATION IN STRATEGY NEW DEVELOPMENTS IN TECHNOLOGY /ENVIRONMENT

8

DECISION MAKING UNDER DIFF STATES OF NATURE

DECISIONS UNDER CERTAINTY

DECISIONS UNDER RISK

DECISIONS UNDER UNCERTAINTY

---------------------- ----------------------- COMPLETE LACK OF CERTAINTY RISK UNCERTAINTY KNOWLEDGE KNOWLEDGE ----------------------- ------------------------ DECISION MAKING UNDER CERTAINTY : PRECISE OUTCOME OF EACH ALTERNATIVE KNOWN

PERFECT KNOWLEDGE IS AVAILABLE

RARELY ENCOUNTERED SITUATION

EX. GOVT INVESTMENTS NSC

DECISION MAKING UNDER RISK : SINGLE ACTION MAY RESULT IN MORE THAN ONE POTENTIAL OUTCOME BUT PROBABILITY OF EACH OUTCOME IS KNOWN

MOST COMMON DECISIONS

EX. ROLL OF DICE 1/6 PROBABILITY OF WINNING ALTERNATIVES ARE CLEAR BUT RESULTS ARE BASED ON CHANCE & DOUBTFUL/ NO OF ACCIDENTS OCCURING

9

DECISION MAKING UNDER UNCERTAINTY : SINGLE ACTION MAY RESULT IN MORE THAN

ONE POTENTIAL OUTCOME BUT PROBABILITY

OF EACH OUTCOME IS UNKNOWN

NO HISTORICAL DATA IS AVAILABLE

EX NEW ADVERTISING PROGRAM/ SELECTION

OF JOB

ABSOLUTE CERTAINTY & ABSOLUTE UNCERTAINTY ARE GENERALLY DIFFICULT CONDITIONS IN REALITY.

10

MODELS OF DECISION MAKING

ECONOMIC MAN MODEL

BASIS : - PEOPLE ARE ECONOMICALLY RATIONAL - PEOPLE ATTEMPT TO MAXIMISE OUTCOMES IN AN ORDERLY AND SEQUENTIAL PROCESS IT IS ASSUMED THAT PEOPLE WILL SELECT THE DECISION WHICH HAS GREATEST ADVANTAGE OR PAYOFF FROM VARIOUS ALTERNATIVES. ALSO THEY'LL SEARCH IN A PLANNED, ORDERLY,& LOGICAL MANNER STEPS IN THE MODEL :

DISCOVER SYMPTOMS OF THE PROBLEM

DETERMINE GOAL TO BE ACHIEVED

DEVELOP A CRITERION FOR ALTERNATIVE SOLUTION EVALUATION IDENTIFY ALTERNATIVES

CONSIDER OUTCOME OF EACH ALTERNATIVE

SELECT BEST ALTERNATIVE BY COMPARING OUTCOME OF EACH ALTERNATIVE WITH DEVELOPED CRITERION

IMPLEMENT THE DECISION

11

THE MODEL IS PRESCRIPTIVE IN NATURE

ASSUMES

PEOPLE HAVE COMPLETE INFORMATION

CAN MENTALLY STORE THIS INFORMATION CAN MENTALLY MANIPULATE ALL THIS INFORMATION CAN RANK ALL THE OUTCOMES IN A ORDERLY MANNER TO IDENTIFY BEST ALTERNATIVE IN REALITY NOT POSSIBLE HOWEVER DUE TO COMPUTERS DATA STORAGE MANIPULATION AND RETRIEVAL I S NOW POSSIBLE THE MODEL IS NOW APPROACHABLE

12

ADMINISTRATIVE MAN MODEL

BASIS: DOES NOT ASSUME INDIVIDUAL RATIONALITY IN THE DECISION PROCESS

WHILE DESIRE IS FOR BEST SOLUTION BUT PEOPLE SETTLE FOR A PRACTICAL SOLUTION THEY SEEK BOUNDED OR LIMITED RATIONALITY IN DECISIONS

STEPS IN THE MODEL :

SET THE GOAL

ESTABLISH APPROPRIATE LEVEL OF ASPIRATION OR CRITERION

GENERATE A SINGLE PROMISING ALTERNATIVE

IF NO FEASIBLE ALTERNATIVE IS FOUND LOWER ASPIRATION LEVEL

AND REGENERATE NEW ALTERNATIVE

AFTER IDENTIFYING A FEASIBLE ALTERNATIVE EVALUATE ITS ACCEPTABILITY

IF UNACCEPTABLE INITIATE SEARCH FOR NEW ALTERNATIVE

IF ALTERNATIVE ACCEPTABLE IMPLEMENT THE SOLUTION

13

SEQUENTIAL ATTENTION TO ALTERNATIVE SOLUTIONS IS MADE

ONE BY ONE ALTERNATIVES ARE GENERATED

PAST SOLUTIONS ARE RELIED UPON TO SEEK SOLUTIONS

SATISFYING SOLUTIONS ARE GENERATED AND NOT NECESSARILY OPTIMAL

IT IS DESCRIPTIVE IN NATURE

14

GAMESMAN MODEL DEALS WITH NONPROGRAMED DECISIONS MODEL DEVELOPED IN 1967 TAKE AN IMPLICIT DECISION AND THEN JUSTIFY IT TAKE A DECISION IN INTUTIVE MANNER AND THEN THRU COVER OF SCIENTIFIC PROCESS JUSTIFY THE DECISION AND PROVE THAT DECISION TAKEN WAS THE BEST DECISION.

15

DECISION MAKING TECHNIQUES AND PROCESSES

PROPER DEFINITION OF THE PROBLEM IS VERY IMPORTANT

ASPIRATION LEVELS/ CRITERION BE DEVELOPED BEFORE ALTERNATIVES ARE GENERATED

OBJECTIVE IS TO IDENTIFY ALTERNATIVES

POPULAR DECISION MAKING TECHNIQUES

BRAINSTORMING

DEVLOPED BY OSBORN

OLDEST METHOD

WIDELY USED FOR SIMULATING CREATIVE THINKING

METHOD :

FORM A GROUP

PRESENT THE PROBLEM

MEMBERS ASKED TO DEVELOP AS MANY POTENTIAL SOLUTIONS AS POSSIBLE

MEMBERS CAN BE EMPLOYEES OR OUTSIDE EXPERTS

16

CRITICISM IS PROHIBITED

FREEWHEELING IS WELCOME

QUANTITY IS WANTED

COMBINATION & IMPROVEMENT ARE SOUGHT

USUALLY SIX TO EIGHT PARTICIPANTS

HALF TO FULL HOUR

TYPICALLY A ONE HOUR SESSION CAN PRODUCE 50 TO 150 IDEAS

MOST IDEAS WILL BE IMPRACTICAL

USUALLY EFFECTIVE IF PROBLEM IS SIMPLE AND SPECIFIC

ENCOURAGING RESULTS IN FIELD OF ADVERTISING/ ARMED FORCES /GOVT

17

S Y N E C T I C S

O F R E C E N T O R I G I N / D E V E L O P E D B Y W I L L I A M G O R D O N

M E A N S " F I T T I N G T O G E T H E R O F D I V E R S E E L E M E N T S "

M E T H O D

M E M B E R S S E L E C T E D W I T H V A R I E T Y O F B A C K G R O U N D / T R A I N I N G

G R O U P L E A D E R I S E X P E R I E N C E D

L E A D E R S T A T E S P R O B L E M T O T H E G R O U P

G R O U P R E A C T S B Y S T A T I N G T H E P R O B L E M A S T H E Y U N D E R S T A N D I T

O N L Y A F T E R N A T U R E O F P R O B L E M I S T H O R O U G H L Y U N D E R S T O O D G R O U P O F F E R S P O T E N T I A L S O L U T I O N S

L E A D E R F O R C E S M E M B E R S T O D E V I A T E F R O M T H E I R T R A D I T I O N A L T H I N K I N G W A Y S T H R U R O L E P L A Y I N G / T H O U G H T P R O V O K I N G E X E R C I S E S

T H R U T H E S E C O M P L E X S E T O F I N T E R A C T I O N S A F I N A L S O L U T I O N E M E R G E S

A T E C H N I C A L E X P E R T I S P R E S E N T T O E V A L U A T E F E A S I B I L I T Y O F I D E A S

L E S S W I D E L Y U S E D T H A N B R A I N S T O R M I N G

U S E D F O R C O M P L E X A N D T E C H N I C A L P R O B L E M S

18

N O M I N A L G R O U P I N G D I F F E R S F R O M B R A I N S T O R M I N G / S Y N E C T I C S A S I T A T T E M P T S T O R E D U C E V E R B A L I N T E R A C T I O N

D O E S N O T R E L Y O N F R E E A S S O C I A T I O N O F I D E A S

M E T H O D 1 . M E M B E R S W I T H D I F F B A C K G R O U N D S / T R A I N I N G A R E B R O U G H T T O G E T H E R & F A M I L I A R I S E D W I T H P R O B L E M

2 . E A C H M E M B E R P R E P A R E S A L I S T O F I D E A S W O R K I N G S I L E N T L Y A N D A L O N E

3 . M E M B E R S T H E N S H A R E T H E I R I D E A S O N E A T A T I M E . A G R O U P F A C I L I T A T O R R E C O R D S F O R O T H E R S T O S E E

4 . G R O U P I N T E R A C T I O N F O L L O W S / I D E A S A R E R E W O R D E D , D E L E T E D C O M B I N E D O R A D D E D

5 . E A C H M E M B E R P R I V A T E L Y V O T E S T O R A N K T H E I D E A S . A D I S C U S S I O N F O L L O W S A N D A S E C R E T B A L L O T I S C O N D U C T E D A N D A R I T H M E T I C A L L Y G R O U P ' S P R E F E R A N C E I S D E T E R M I N E D

N O M I N A L G R O U P I N G H A S B E E N S U C C E S S F U L L Y U S E D I N W I D E V A R I E T Y O F O R G A N I S A T I O N S

IT I S P R O A C T I V E R A T H E R T H A N R E A C T I V E

M E M B E R S M U S T G E N E R A T E T H E I R O W N I D E A S

19

CREATIVE THINKING

BASIC REQUIREMENT AT THE STAGE OF SEARCHING ALTERNATIVES IS TO BECOME CREATIVE AND ANALYTICAL

CREATIVITY HAS BOTH CONSCIOUS AND SUBCONSCIOUSSTAGES INVOLVING BOTH INDIVIDUAL AND GROUP INTERACTIONS.

20

C O N C L U S I O N

EVALUATION OF ALTERNATIVES

SELECTION OF AN ALTERNATIVE

IMPLEMENTATION OF DECISION

IN ESTABLISHING ALTERNATIVES GROUPS ARE SUPERIOR TO INDIVIDUALS

IN IDENTIFYING ALTERNATIVES INDIVIDUAL EFFORTS ARE IMPORTANT

IN EVALUATING ALTETRNATIVES GROUP JUDGEMENT IS OFTEN SUPERIOR

IN CHOOSING AN ALTERNATIVE INVOLVING GROUP MEMBERS LEADS TO GREATER ACCEPTANCE

IN IMPLEMENTING THE CHOICE INDIVIDUAL RESPONSIBILITY IS SUPERIOR TO GROUP RESPONSIBILITY

MANAGERS ARE MORE PARTICIPATIVE IF QUALITY OF DECISION IS IMPORTANT

SUBORDINATE ACCEPTANCE IS CRITICAL

WHEN SUBORDINATES FOCUS ON ORGANISATIONAL GOALS

MANAGERS ARE LESS PARTICIPATIVE IF TIME IS LIMITED & QUICK DECISION NEEDED

PAST SOLUTIONS ARE BEING APPLIED

ALL NECESSARY INFORMATION IS THERE